Reduce exposure to fluctuations in the value of baht

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Reference no: EM131911950

UVA Co. is a US firm that obtains 40% of its supplies from Thailand. It also borrows the Thai currency (baht) from Thai banks and converts the baht to dollars to support US operations. It receives 10% of its revenue from Thai customers with its sales denominated in baht.

a. Why would an increase in the value of the baht be likely to reduce profit for UVA Co.?

b. Explain one way the company could reduce its exposure to fluctuations in the value of the baht.

Reference no: EM131911950

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