If an MNC borrows funds in a foreign currency and that currency appreciates over time, the MNC will need fewer funds to cover the coupon or principal payments. (Assume the MNC has no other cash flows in that currency.)

Question

Quizplus · Accepted Answer

If the foreign currency appreciates, the MNC will need more of its home currency to convert into the foreign currency to cover the same amount of coupon or principal payments, making it more expensive to service the debt.

If an MNC Borrows Funds in a Foreign Currency and That