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Forecasting Exchange Rate

Blade Inc, is U.S Based manufacturer of roller blade, has 3 years contract to export to Thailand. Blades will also import certain component from Thailand (10 PCT OF REVENUE IS GENERATED FROM THAILAND, 10 PCT OF ITS COST IS GOODS SOLD IN THAILAND).Economic conditions in Thailand is being unfavorable. The technical forecast indicates a depreciation of baht by 6 pct over next quarter from the baht's current level of $0.23 to $0.02162. Based on the inflation and interest rates, there is 30 percent chance that the baht will depreciate by 2 percent, a 15 percent chance that the baht will depreciate by 5 percent, and a 55 percent chance that the baht will depreciate by 10 percent.

I need to know only the answer to one question. Thanks
A) Considering both Blades' current practices and future plans, how can it benefit from forecasting the baht-dollar exchange rate?

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Given Blade's current assumption on the future movements of the Bath and ...

Solution Summary

This solution provides recommendations on how to benefit from forecasting the baht-dollar exchange rate.

$2.19