If Juana contracts to buy U.S.office equipment in U.S.dollars and her domestic currency depreciates against the U.S.dollar between the time the contract is signed and the bill is paid,she will wind up paying less for the equipment because she stayed in the spot market.

Question

Quizplus · Accepted Answer

If Juana's domestic currency depreciates against the U.S. dollar, it would actually cost her more to buy U.S. office equipment because the exchange rate has shifted in favor of the U.S. dollar. Therefore, she would not wind up paying less, but rather more.

If Juana Contracts to Buy U