Selling foreign currency receipts from sales. Assume that the US Dollar (USD) rate was 1.50 to £1 sterling (GBP) when they made their contract of sale. Assume that the UK
On the day they receive the USD 1500, if the rate has gone against them, became stronger, say to 1.60, they would receive 1500/1.60 = GBP 937.50 (a loss of 62.50). But if the rate has gone in their favour, became weaker, say to 1.40, they would receive 1500/1.40 = GBP 1071.43 (a gain of 71.43). When sterling becomes weaker against a foreign currency (1.50 down to 1.40 in this example) exporters benefit from a spot rate sale. When sterling becomes stronger against a foreign currency (1.50 up to 1.60 in this example) exporters lose from a spot rate sale.