Question: Standard advice given to firms exporting to soft currency countries is

Standard advice given to firms exporting to soft-currency countries is to invoice in their own currency. Critically analyze this recommendation and suggest a framework that will help a financial manager decide whether to stipulate hard-currency invoicing in export contracts.
a. Under what circumstances does this advice make sense?
b. Are these circumstances consistent with market efficiency?
c. Are there any circumstances under which importer and exporter will mutually agree on an invoicing currency?

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  • CreatedJune 27, 2014
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