The French importer accepts the quotation, for delivery and payment in 90 days, but his acceptance is not received until August 10. The exporter now finds that he will receive approximately $180,000. That amount could be protected against changes for the 90-day period, but the loss has already occurred.

The other side of this does not follow. If the French importer receives a quotation in dollars, his acceptance gives rise to his exchange exposure and at that time he enters into a forward exchange contract. After the devaluation of the franc, he has to reconsider the desirability of a specific purchase in terms of the additional cost in francs.

To examine the payment date assumption, a U.S. exporter again makes a sale for French francs calling for payment of FF 1,000,000 on July 31, 1969. The sale can be made on open account or against a note due on July 31, or in a number of other ways. Payment is not received by the exporter on July 31, or in a number of other ways.

Payment is not received by the exporter on July 31, either because the customer delays or because of paperwork problems, and is not made until August 1. Assume the exporter has covered the transaction by selling the French francs forward for delivery July 31 at $0.199 per franc. The spot rate for value July 31 is $0.201 per franc.