St. Louis, Inc., which relies on exporting, denominates its exports in pesos and receives pesos every month. It expects the peso to weaken over time. St. Louis recognizes the limitation of monthly hedging. It also recognizes that it could remove its transaction exposure by denominating its exports in dollars, but it would still be subject to economic exposure. The long-term hedging techniques are limited, and the firm does not know how many pesos it will receive in the future, so it would have difficulty even if a long-term hedging method was available. How can this business realistically reduce its exposure over the long term?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.