If a U.S. firm plans to frequently purchases goods from Hong Kong over the next several years, it does not have to worry about exchange rate risk.

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Even if a U.S. firm plans to frequently purchase goods from Hong Kong over the next several years, it still has to worry about exchange rate risk. The exchange rate between the U.S. dollar and the Hong Kong dollar can fluctuate over time, and the firm may end up paying more or less for the goods depending on the exchange rate at the time of payment. Therefore, the firm should consider hedging strategies to manage exchange rate risk.

If a US Firm Plans to Frequently Purchases Goods from Hong Kong