Currencies of some Latin American countries, such as Brazil and Venezuela, frequently weaken against most other currencies.

Question:

Currencies of some Latin American countries, such as Brazil and Venezuela, frequently weaken against most other currencies. What concept in this chapter explains this occurrence? Why don’t all U.S.-based MNCs use forward contracts to hedge their future remittances of funds from Latin American countries to the United States if they expect depreciation of the currencies against the dollar?