Your factory in Malaysia produces sarongs for the local market. The factory purchases cotton from India whose currency is pegged to the U. S. $. Having borrowed funds from you (in U. S. $) they pay $ 1,200,000 interest per year. Malaysia raises the interest rate in order the ringitt appreciates.
a. What happens to the sales in Malaysia?
b. What happens to the cost of materials?
c. As the manager in Malaysia what happens to the monthly interest payments to the Head Office?