Question

Ranbaxy (India) in Brazil. Ranbaxy, an India-based pharmaceutical firm, has continuing problems with its cholesterol reduction product's price in one of its rapidly growing markets, Brazil. All product is produced in India, with costs and pricing initially stated in Indian rupees (Rps), but converted to Brazilian reais (R$) for distribution and sale in Brazil. In 2009, the unit volume was priced at Rps20,900, with a Brazilian real price set at R$892. But in 2010, the real appreciated in value versus the rupee, averaging Rps25.86 / R$. In order to preserve the real price and product profit margin in rupees, what should the new rupee price be set at? First, the implied spot exchange rate for the previous year, 2009 must be found. The implied spot exchange rate for the previous year, 2009 is Rps (R$. (Round to two decimal places.)

Assuming that Ranbaxy wishes to preserve the Brazilian real price for​ competitiveness, the same Brazilian real price must be converted back into Indian rupees with the new spot exchange rate in rupees per real. The new price is Rps

Answer 1

Implied spot rate in 2009=20900/892=23.43049327 Rupee/BRL
Price in 2010 in Rupees=892*25.86=23067.12