Your manager has asked that your group provide a report to your firm’s international division on the risk of devaluation of its receivables from selected countries in the coming year. The division carries a set of receivables from BRICS countries; your firm’s international division aggressively went into these countries because they were labeled as emerging economies some years back. The set of receivables from each country, on average, have a 6-month maturity, are denominated in the local currency and have a value of about a million in US dollar terms, based on current exchange rates). In terms of foreign exchange risk, which set of receivables should the international division be concerned with, why, and what precautions can or should the division pursue to minimize risk.
Price Waterhouse Coopers provides a Global Economy Watch report (Links to an external site.)Links to an external site. which contains economic projections, particularly inflation rates in these countries.