The long-run exchange rate risk faced by an international ﬁrm can be reduced if the ﬁrm borrows
money in the foreign country where they have operations.

Name: The long-run exchange rate risk faced by an international ﬁrm can be reduced if the ﬁrm borrows money in the foreign country where they have operations.
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Question

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Borrowing in the foreign country can create a natural hedge by matching the currency of revenues with the currency of liabilities, thus reducing exchange rate risk.

The Long-Run Exchange Rate Risk Faced by an International ﬁRm