The Country B has exposed to high inflation rate for many years. This has resulted in a decline in the value of Country B’s currency against the dollar of Country U. Later, the government of country B has bought down the annual inflation rates into single digits. As a result, the Country B’s economy has progressed tremendously due to the lower inflation rate policies. This in turn has resulted in a steady appreciation of Country B’s currency against the dollar of Country U. The appreciation in the value of Country B’s currency has benefited Company E (manufacturer of regional jets). Later, the Company E has deal with impact of currency appreciation on its revenue and decided to hedge against the future appreciation of Country B’s currency through purchasing forward contracts. Suddenly, the Company E has incurred a loss of $121 million during the financial crisis period. Characters in the case: Company E To discuss: Whether the fall in the value of Country B’s currency against dollar is good, bad, or a mixed bag for Company E.

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Chapter 10, Problem 2CDQ

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Case summary:

The Country B has exposed to high inflation rate for many years. This has resulted in a decline in the value of Country B’s currency against the dollar of Country U. Later, the government of country B has bought down the annual inflation rates into single digits. As a result, the Country B’s economy has progressed tremendously due to the lower inflation rate policies. This in turn has resulted in a steady appreciation of Country B’s currency against the dollar of Country U.

The appreciation in the value of Country B’s currency has benefited Company E (manufacturer of regional jets). Later, the Company E has deal with impact of currency appreciation on its revenue and decided to hedge against the future appreciation of Country B’s currency through purchasing forward contracts. Suddenly, the Company E has incurred a loss of $121 million during the financial crisis period.

Characters in the case:

Company E

To discuss: Whether the fall in the value of Country B’s currency against dollar is good, bad, or a mixed bag for Company E.

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