What is a forward contract?

A forward contract is a privately negotiated agreement between two parties to buy or to sell an asset at a specified price on a future date. Under forward contract, there is an obligation for the buyer to pay for what has been bought and receive delivery thereof as per contract, and for the seller to give…

What are FOB value and CIF Value?

The export order received by an exporter from a foreign buyer may be on FOB terms, CIF firms, and CIP or CPT terms are among the most common of the 12 international commerce terms (incoterms) established by the International Chamber of Commerce (ICC) in 1936. These are international shipping agreements used in the transportation of…

What is capital account convertibility (CAC)?

Capital Account Convertibility means that the currency of a country can be converted into foreign exchange without any controls or restrictions. The Report of the Tarapore Committee on Capital Account Convertibility (1997) provided the following working definition of CAC: “freedom to convert local financial assets into foreign financial assets and vice versa at market determined…