Uncertainty of exchange rate
Uncertainty of the exchange rate does not essentially means that the firms face exchange risk exposure. Explain this scenario.
Expert
A firm can have natural hedging position due to flexible sourcing capabilities, diversified markets, and so forth. Additionally, to the extent that PPP demonstrate insignificant changes of the exchange rate doesn’t influence the firms’ competitive positions. Under such conditions, firms do not required to worry about the exchange risk exposure.
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