Reducing the amount of borrowing denominated in the currency of the foreign subsidiary is a method of reducing the long-run exposure risks of foreign exchange.

Question

Quizplus · Accepted Answer

Reducing borrowing in the currency of the foreign subsidiary might actually increase long-run exposure risks, as borrowing in the local currency can serve as a natural hedge against currency fluctuations.

Reducing the Amount of Borrowing Denominated in the Currency of the Foreign