Response to the following problem:
Salem Exporting Co. purchases chemicals from U.S. sources and uses them to make pharmaceutical products that are exported to Canadian hospitals. Salem prices its products in Canadian dollars and is concerned about the possibility of the long-term depreciation of the Canadian dollar against the U.S. dollar. It periodically hedges its exposure with short-term forward contracts, but this does not insulate against the possible trend of continuing Canadian dollar depreciation. How could Salem offset some of its exposure resulting from its export business.