MNC to run Yves Xi and moniter Home Depot
Raw Material: Soy beans
Supplier's country: Brazil
Foreign supplier: Pare Grke Industria e Comércio de Arruz e Saja
Home country Canada
Foreign Exchange Risk. As a MNC you encounter foreign exchange risk.
(A) Discuss the different options for hedge receivables and payables (as discussed in class). Recommend to your Board the best hedging strategy for the MNC.
(B) As an MNC, when would you use the spot rate? Explain your answer.
(C) If the MNC currency's is weaker, how will it impact your purchase (from question 2) and profits?
(D) Go to www.oanda.com Click on "Currency Tools", then "Historical Currency Converters", and "Currency Trends". Explain how the home currency has changed over the last three months and how will it impact the MNC's business.
(E) When the host currency (supplier's currency) devalues, is it bad for everyone? Discuss using examples.
(F) Discuss the types of foreign exchange exposures and discuss which if any will impact the MNC.
