Problem
Raton is a U.S. Company that has net inflows of 80 million Swiss francs and net outflows of 60 million British pounds. The present direct exchange rate of the Swiss franc is $1.07/1Swiss franc while the present direct exchange rate of the pound is $1.28. Raton has not hedged these positions. The Swiss franc and British pound are highly correlated in their movements against the dollar. Explain whether Raton will be favorably or adversely affected if the dollar weakens against foreign currencies over time.