Some U S based MNCs have business in developing countries in which it is difficult to hedge their exposure to exchange rate risk Their forecasts of the currency 's future exchange rate is subject to much error because the currencies in these countries tend to be very volatile, and could possibly de...

While it is impossible to forecast exchange rates of these currencies accura ...

Some U.S.-based MNCs have business in developing countries in which it is difficult to hedge their exposure

Question:

Some U.S.-based MNCs have business in developing countries in which it is difficult to hedge their exposure to risk. Their forecasts of the currency's future is subject to much error because the currencies in these countries tend to be very volatile, and could possibly depreciate by 20% or more in a given year.. Write a short essay on how MNCs that have receivables in these currencies might be able to use forecasts to prepare for possible weak currency scenarios, so that they can assess whether they will have sufficient dollar cash inflows to cover their debt payments.
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...