It’s called “Hedge Foreign Exchange Risk”! American consumers bu…

It’s called “Hedge Foreign Exchange Risk”! American consumers buy their cars using dollars. If I import cars from a foreign country I take the risk that the dollar will weaken ( which seems very likely in the long term ) against the importing countries currency. Because I am selling my cars in dollars I can’t easily change the price around to reflect my FX costs. Of course this same principle can work in your favor if the dollar strengthens and you can try and hedge some of this risk in the swap market.

If the long term it is less risky to have most of your expenses in local currencies where they can be directly tied to the price you charge for your goods.

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