Your can issue a Letter of Credit in any tradeable currency - the question is, does you US supplier want to be paid in Indian Rupees?? - What does your contract say about currency of sale??
If you are concerned about the exchange rate fluctuation you should be purchasing the USdollars at the time of L/C issuance so the exchange rate in future will not affect the cost to you. Speak to your bank about this.
You can purchase US Dollars in advance to know exactly the exchange rate, but purchasing them in advance may not be the best method of hedging your foreign currency risk. I suggest you talk to your banker regarding the managing of this risk. They may be able to offer options, window forwards or swaps that will allow you to better manage your US Dollar position while not tying up your Indian Rupees too early in the deal or leave you stuck with excess dollars in the case of partial shipments.
Best of luck in managing your foreign currency risk!
Curreny of L/C
Your can issue a Letter of Credit in any tradeable currency - the question is, does you US supplier want to be paid in Indian Rupees?? - What does your contract say about currency of sale??
If you are concerned about the exchange rate fluctuation you should be purchasing the USdollars at the time of L/C issuance so the exchange rate in future will not affect the cost to you. Speak to your bank about this.
Hedging exchange rate risk
Further to Peter's comments.
You can purchase US Dollars in advance to know exactly the exchange rate, but purchasing them in advance may not be the best method of hedging your foreign currency risk. I suggest you talk to your banker regarding the managing of this risk. They may be able to offer options, window forwards or swaps that will allow you to better manage your US Dollar position while not tying up your Indian Rupees too early in the deal or leave you stuck with excess dollars in the case of partial shipments.
Best of luck in managing your foreign currency risk!
LC Sam