Adjustment Definition – Sometimes referred to as “Currency Adjustment Factor”, or CAF, it rises as the value of the U.S. dollar falls. It is applied as a percentage on top of the base foreign exchange rate, which is calculated as the average forex rate for the previous three months. The applicability of this type of charge is for trade shipments primarily between the United States and Pacific Rim countries. It is applied on top of freight costs by carriers servicing trade in these regions. The charge was developed due to costs that carriers incur from constantly changing exchange rates between the U.S. dollar and other foreign currencies. Due to this added charge, shippers are now looking to enter into “all inclusive” contracts at one price that accounts for all applicable charges, to limit the effect of the CAF.
Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.