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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A sporting goods manufacturer in Germany buys all metal hardware used for assembling a packable kayak from a factory in Mexico. The monetary policy recently implemented by Banco de México has created favorable conditions for sustained economic growth, significantly lowering inflation levels. The relevant economic parameters are provided below:

  • Inflation in Mexico after policy implementation: 3.5%
  • Inflation in Mexico before policy implementation: 4.9%
  • Inflation in Germany: 1.3%
  • EURMXN before policy implementation: 24.8

Which of the following conclusions could the manufacturer correctly make about the relevant effect of the policy change on the business?

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