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Benefits from exchange rate exposure

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Firm phaRmX is a U.S. company that has exposure to the Chinese yuan (CY) and Taiwanese new dollar (TD). It has net inflows of TD100 million and net outflows of CY500 million. The present exchange rate of the TD is about $0.04 while that of the CY is $0.15. Firm phaRmX has not hedged these positions. Assume the TD and CY are highly correlated in their movements against the dollar. Assess whether or not Firm phaRmX benefits from their exchange rate exposure, if the U.S. dollar weakens.

Reference no: EM133003983

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