Authorised dealers may sometimes be approached by their customers who are engaged in export/import trade consultancy services etc. for advice regarding choice of currencies besides Indian rupee SDR or Euro for the purpose of contracting with their overseas counterparts. Authorised dealers may advise their customers that while there are no restrictions from the Exchange Control viewpoint on any foreign currency being chosen Exim Policy stipulates that all export contracts and invoices (except those for which payments are required to be received through the Asian Clearing Union) shall be denominated only in a freely convertible foreign currency. They may also be advised that settlement of payments in terms of the contracts will eventually have to take place in a permitted currency and they will be well advised to choose one of such currencies even for contracting purposes. Additionally although authorised dealers are allowed in terms of paragraph 3C.1 to provide forward cover to residents in any permitted currency the absence of a forward exchange market in India or in an overseas centre for covering the exchange risk of authorised dealers in even some of the permitted currencies may result in residents being unable to protect themselves against exchange risk in case of need. The choice of currencies for the purpose of contracting should therefore be made after proper assessment of these factors

NOTE: In case of countries (excluding Nepal) which are members of the Asian Clearing Union provisions of the Memorandum of procedure (ACM) dealing with obligatory routing of eligible current transactions between members would be relevant.