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Construction Law/exchange rate on price escalation


Dear Sir,

Our FIDIC contract provides for price escalation. The payment currency is USD whereas index currency is INR (Indian Rupees) and SLR(Sri Lankan Rupees).

While there is an appreciation in index value, there is depreciation in exchange between INR and USD.

Kindly clarify
1. whether Exchange rate variation is applicable for the full contract value or only for the change in index value.

2. If it is applicable for the full contract value, will it reduce the Contract value less than agreed Original Contract price ? Can we protect atleast present contract value ?

Thanks and Regards,


Dear S Iyappan,

Would you please apprise me which conditions of Contracts are applicable in case of your Contract--FIDIC 1987 fourth Edition or FIDIC 1999 or MDB version and is there provision of Price adjustment formula in your Contract document.As for as I know,Currency conversion rates  are mentioned/fixed in the Contract on the basis of available rates of those currencies on the base date of the Contract,if a contract has payment in various currency, . All due payments are worked out in various currencies of payment  by applying the exchange rate specified  in the Contract.
It would be better if you send me the copies of the  relevant clauses for a comprehensive letter.In the absence of those,i can not comment.
Sorry for late answering
Engr.Arshad Mahmood

Construction Law

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Arshad Mahmood


I may answer to the questions relating to FIDIC 4th as well as FIDIC 2010 MDB Harmonized version,price adjustment ,Variations,Eot and Cost claims,EPC Contract,Bidding Document,consultancy Contracts,certification,Standard Forms, Dispute resolution; and others pertaining to Contract implementation.


Contract management and Contract Administration, using FIDIC Conditions of 4th Addition as well as Fidic 1999 Red, Yellow and Silver Books including MDB Harmonized Edition 2010. Particularly in the area of Procurement of Contracts, Certification,Price Adjustment, variations,disputes management, EoT and Cost Claims; and other contractual issues arises from time to time during currecy of the Contracts.

Member -Pakistan Engineering Council Member -Pakistan Engineering Congress Member -FIDIC Organisation

Joint Venture and Consortium Agreements for Pakistan Engineering Council,Pakistan

BSc Civil Engineering; Basic Management course; Hydro power Projects; and various other on Job Trainings

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