If positions in a specific currency among an MNC's subsidiaries offset each other, the decision by one subsidiary to hedge its position in that currency would increase the MNC's overall exposure.

Question

Quizplus · Accepted Answer

If positions in a specific currency among an MNC's subsidiaries offset each other, then the net exposure of the MNC to that currency is zero. If one subsidiary decides to hedge its position in that currency, it will reduce the net exposure of the MNC to that currency, thereby increasing the overall exposure of the MNC.

If Positions in a Specific Currency Among an MNC's Subsidiaries