1 What is the business reason for China Noah 's potential currency exposure Does the company really need to subject itself to substantial exchange rate risk Is the risk material to China Noah Do you think China Noah should hedge 2 How does China Noah 's profitability (using return on sales as the p...

1 China Noah is a wood flooring manufacturer for the Chinese market therefore requiring a large growing and dependable source of wood for its business The Chinese marketplace faces an increasing short ...

1. What is the business reason for China Noah's potential currency exposure? Does the company really need...

Question:

1. What is the business reason for China Noah's potential currency exposure? Does the company really need to subject itself to substantial risk? Is the risk "material" to China Noah? Do you think China Noah should hedge?
2. How does China Noah's profitability (using return on sales as the primary metric) change depending on whether the IDR/CNY follows (a) forecast spot rates, (b) forward rate quotes, or (c) fixed rate baseline assumption?
3. Assuming Noah made 6-month payments on its wood purchases from Indonesia, what is the schedule of foreign currency amounts over time?
4. What would be your outlook on the future direction of the Indonesian rupiah and the Chinese renminbi (yuan)? Should this influence the hedging approach used by Noah?
5. Which of the hedging choices would you recommend?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...