As a seller of information to customers in Brazil, you are an exporter and you periodically purchase advertising space on Brazilian Web sites to advertise your service; therefore are an importer of a service. If you could not afford to pay for the advertising space in advance, you might finance your purchases of Brazilian advertising services in a manner that reduces your exchange rate risk. With an established office in Brazil describe the conditions under which you may need local short-term financing. Review the prevailing level of interest rates in Brazil, using the Web site https://www.latin-focus.com.
Based on the prevailing interest rate level, do you think the cost of this short-term financing would be relatively high or low or would you be better off with a line of credit or borrowed funds that you maintain as cash in case funding is needed; assume also that you may need to borrow short-term funds to support your Brazilian office. You can borrow short-term funds at a 2% points above the quoted interest rates.