Having a liability that is fixed in terms of a foreign currency results in a loss for the debtor if the exchange rate falls between the transaction date and the payment date.

Question

Quizplus · Accepted Answer

If the exchange rate falls, it means the foreign currency has weakened against the debtor's local currency, requiring less of the local currency to settle the foreign currency liability, thus potentially resulting in a gain, not a loss, for the debtor.

Having a Liability That Is Fixed in Terms of a Foreign