Name Abdul Rehman

ID 160112

Class BSAF 6

Assignment 5

Transactions That Influence Impact of Local

the Firm’s Local Currency Inflows Currency

Depreciation

a) Local sales Increase

 If local currency depreciate foreign goods are expensive so demand shift to local products.

b) Firm’s exports denominated in local currency Increase

 Because we will receive the money in foreign currency if foreign currency appreciate we will
receive more money.

c) Firm’s exports denominated in foreign currency Increase

 Because foreign currency appreciate and we will get more money

d) Interest received from foreign investments Increase

 because foreign currency appreciate and we will get more money when we convert .

Transactions That Influence

the Firm’s Local Currency Outflows

e) Firm’s imported supplies denominated in local currency no Change

 because we will pay in local currency so no impact on us

f) Firm’s imported supplies denominated in foreign currency Increase

 Our outflow increase because foreign currency appreciate we will pay more

g) Interest owed on foreign funds borrowed Incraese

 As our currency depreciate so we will pay more interest.