FOREIGN DRAFT Meaning and
Definition
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Foreign Draft is a financial instrument commonly used in international trade transactions that allows a buyer to make payment to a seller in a foreign currency. It is essentially a type of draft or check issued by a buyer's bank on behalf of the buyer, which can be deposited directly into the seller's bank account.
A foreign draft is a method of payment particularly employed when the buyer and seller are in different countries and wish to conduct their trade in different currencies. The buyer's bank, upon receiving the buyer's instructions, prepares a foreign draft payable to the seller in the seller's preferred currency. The draft includes details such as the amount, currency, and the seller's bank details.
This financial instrument offers several advantages for both parties involved in the transaction. It provides assurance to the seller that the buyer has the necessary funds to complete the purchase, as the foreign draft is prepaid. Moreover, the seller can avoid the complications and risks associated with exchange rate fluctuations by receiving payment in their preferred currency.
Foreign drafts are commonly used for various types of international trade transactions, including the purchase of goods, payment for services, or even settlement of international debts. They serve as a secure and convenient way to facilitate cross-border payments, allowing buyers and sellers to engage in international trade with ease.
Common Misspellings for FOREIGN DRAFT
- doreign draft
- coreign draft
- voreign draft
- goreign draft
- toreign draft
- roreign draft
- fireign draft
- fkreign draft
- flreign draft
- fpreign draft
- f0reign draft
- f9reign draft
- foeeign draft
- fodeign draft
- fofeign draft
- foteign draft
- fo5eign draft
- fo4eign draft
- forwign draft
Etymology of FOREIGN DRAFT
The word "foreign draft" has a straightforward etymology derived from its individual components.
The term "draft" originated in the late 16th century from the Middle Dutch word "dragh", meaning "pull" or "draw". Over time, it evolved to refer to a written order for payment, typically issued by one bank or financial institution to another, instructing them to pay a specific amount of money to a named beneficiary.
On the other hand, the word "foreign" has its roots in Old English and Latin. In Old English, "foran" meant "before" or "in front of", while in Latin, "foris" meant "outside" or "beyond". Over time, "foreign" came to mean "belonging to another country or nation" or "from a different place".
Similar spelling words for FOREIGN DRAFT
- foreign mission,
- foreign-born,
- foreign aid,
- foreign bill,
- foreignness,
- foreign agent,
- foreign service,
- foreign minister,
- foreign policy,
- foreign legion,
- foreign office.
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