Order #GAFD998.docx - Running head EFFECTS OF CURRENCY FLUCTUATIONS Effects of Currency Fluctuations Student Name Institution Affiliation 1 2 EFFECTS OF

Order #GAFD998.docx - Running head EFFECTS OF CURRENCY...

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Running head: EFFECTS OF CURRENCY FLUCTUATIONS 1 Effects of Currency Fluctuations Student Name Institution Affiliation
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2 EFFECTS OF CURRENCY FLUCTUATIONS Effects of Currency Fluctuations The anticipated fluctuations in exchange rate may have both positive and negative implications to our U.S firm and our Mexico subsidiary. With the Mexican peso depreciating by 30% against the Unite States dollar, our U.S firm will be able to save much on the production cost especially for the production of products whose inputs are from the Mexico subsidiary. However, the depreciation can affect pour Mexico market negatively since it will raise the prices of our products in Mexico market hence in the long run making the consumers demand less. Additionally, the fluctuations will make our Mexican subsidiary financing to increase by approximately 30% since in this case the subsidiary has to pay more in Mexican peso for one U.S dollar. Hence the cost of the debt refinancing will generally increase. However, with proper planning, the anticipated depreciation of the value of Mexico peso against U.S dollar could be
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  • Fall '17
  • asad khan

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