Assume you are a Chinese exporter and expect to receive $250,000 at the end of 60 days. You can remove the risk of loss due to a devaluation of the dollar by:

Question

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By selling dollars in the 60-day forward exchange market, the Chinese exporter can lock in a exchange rate for the $250,000 payment regardless of any fluctuations in the currency market. This eliminates the risk of loss due to a devaluation of the dollar. Option B is not feasible as it requires the exporter to buy dollars now, which is not necessary if they are expecting a payment in dollars in the future. Option C involves selling the yuan equivalent, which is not relevant in this scenario. Option D does not address the currency risk at all.

Assume You Are a Chinese Exporter and Expect to Receive