When an MNC borrows in two foreign currencies with lower interest rates than the U.S. rate, the portfolio will have a higher effective financing rate than a loan in U.S. dollars if both currencies depreciate simultaneously against the dollar.

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When an MNC borrows in two foreign currencies with lower interest rates than the U.S. rate, the portfolio will have a lower effective financing rate than a loan in U.S. dollars if both currencies depreciate simultaneously against the dollar. This is because the interest payments in the foreign currencies will be cheaper due to their lower interest rates, and the principal repayment in U.S. dollars will be lower due to the depreciation of the foreign currencies.

When an MNC Borrows in Two Foreign Currencies with Lower