A currency adjustment clause changes price when an exchange rate moves outside agreed conditions. It allocates FX risk between buyer and supplier rather than leaving it implicit in a fixed price.
| Area | What the record should show |
|---|---|
| Control | Specify the currency pair, reference source, base rate, trigger, calculation, review timing, cap and treatment of favorable movement. |
| Evidence | Keep the base quotation, reference rate, dated source, calculation, approval and effective invoices or orders. |
| Tradeoff | A currency clause can double-count FX if the supplier already hedged or priced in a buffer. Clarify what exposure the formula covers. |
When it matters
Specify the currency pair, reference source, base rate, trigger, calculation, review timing, cap and treatment of favorable movement.
Review before approval
Keep the base quotation, reference rate, dated source, calculation, approval and effective invoices or orders.
A currency clause can double-count FX if the supplier already hedged or priced in a buffer. Clarify what exposure the formula covers.
