If it borrows yen it will be exposed to exchange rate risk


California Rice, Inc. (CRI), a U.S. exporter of agriculture products to Japan, denominates its exports in dollars and has no other international business. It can borrow dollars at 9 percent to finance its operations or borrow yen at 3 percent. If it borrows yen, it will be exposed to exchange rate risk. How can CRI borrow yen and possibly reduce its economic exposure to exchange rate risk?

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Finance Basics: If it borrows yen it will be exposed to exchange rate risk
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