Question Details

What types of Asian firms would have been affected 



1. Impact of Exchange Rates on Earnings. Cieplak, Inc., is a U.S.-based MNC that has expanded
into Asia. Its U.S. parent exports to some Asian countries, with its exports denominated in the
Asian currencies. It also has a large subsidiary in Malaysia that serves that market. Offer at least
two reasons related to exposure to exchange rates why Cieplak- earnings were reduced during the
Asian crisis.

2. Speculating Based on Exposure. During the Asian crisis in 1998, there were rumors that China
would weaken its currency (the yuan) against the U.S. dollar and many European currencies. This
caused investors to sell stocks in Asian countries such as Japan, Taiwan, and Singapore. Offer an
intuitive explanation for such an effect. What types of Asian firms would have been affected the
most?




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