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Why they need to hedge foreign exchange

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Reference no: EM132707481

Despite some of the business challenges that you identified about your chosen country, you decided to move ahead and open an office in the financial center of this country. Your first customer is a large MNC that is looking to finance a plant in Latin America. They have asked for your assistance in advising them on this business endeavor.

Using information that you gathered from your last assignment on Mexico and other course materials, discuss its options and the foreign exchange aspects that affect the financing for the MNC. Include the following:

Foreign currency risk

Why they need to hedge foreign exchange

What sort of foreign exchange instruments you would recommend

Whether they have to be aware of any government regulations that would affect earnings and cash flow

Include the need to be aware of inflation and interest rates and how it affects exchange rates.

Keep in mind that the country that the plant is in does not necessarily have to be where the financing is done.

Reference no: EM132707481

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