Uncertainty of exchange rate

Uncertainty of the exchange rate does not essentially means that the firms face exchange risk exposure. Explain this scenario.

E

Expert

Verified

A firm can have natural hedging position due to flexible sourcing capabilities, diversified markets, and so forth. Additionally, to the extent that PPP demonstrate insignificant changes of the exchange rate doesn’t influence the firms’ competitive positions. Under such conditions, firms do not required to worry about the exchange risk exposure.

   Related Questions in Financial Accounting

©TutorsGlobe All rights reserved 2022-2023.