MNEs can hedge against currency fluctuations by dispersing production to different locations around the globe.

Question

Quizplus · Accepted Answer

By dispersing production to different locations, MNEs can mitigate the impact of currency fluctuations on their operations in one particular country. For example, if a company produces goods in multiple locations around the world, they can sell those goods in different currencies and therefore reduce their exposure to currency risk. Additionally, if a company has operations in countries with currencies that are expected to appreciate, they can use those revenues to offset losses in countries with depreciating currencies.

MNEs Can Hedge Against Currency Fluctuations by Dispersing Production to Different