You have a business based in Australia that has just exported a product to a buyer in Mexico. The invoice for this sale is denominated in Australian dollars (AUD) and must be paid in 30 days. That is, your customer will pay you in AUD.
Given this arrangement, what is the exchange-rate risk you face as an exporter?

Question

You have a business based in Australia that has just exported a product to a buyer in Mexico. The invoice for this sale is denominated in Australian dollars (AUD) and must be paid in 30 days. That is, your customer will pay you in AUD. 
 Given this arrangement, what is the exchange-rate risk you face as an exporter?

Answer

The risk is that the AUD will weaken against the peso.

Answer

You face no exchange-rate risk since your customers pay in AUD.

Answer

Mexico borders the USA so you are exposed to the AUD weakening relative to the USD.

Answer

The risk is that the AUD will strengthen against the peso.

Crowdly

You have a business based in Australia that has just exported a product to a buy...

Want instant access to all verified answers on learning.monash.edu?