At the onset of the Asian financial crisis in 1997, many companies in Thailand found themselves in trouble because they had borrowed in dollars, and thus saw their liabilities increase as the Thai baht depreciated. This is an example of which kind of exposure?

Question

Quizplus · Accepted Answer

Translation exposure occurs when the value of a company's assets or liabilities changes due to changes in exchange rates. In this case, the Thai companies' liabilities increased as the Thai baht depreciated, which is an example of translation exposure.

At the Onset of the Asian Financial Crisis in 1997