5 What do you think will happen to the Thai baht’s value when the swap arrangement is completed?

How will this affect Blades?

Recall that Blades, the UK manufacturer of roller blades, generates most of its revenue and incurs most of its expenses in the United Kingdom. However, the company has recently begun exporting roller blades to Thailand. The company has an agreement with Entertainment Products, Inc., a Thai importer, for a threeyear period. According to the terms of the agreement, Entertainment Products will purchase 180 000 pairs of ‘Speedos’, Blades’ primary product, annually at a fixed price of 4594 Thai baht per pair. Due to quality and cost considerations, Blades is also importing certain rubber and plastic components from a Thai exporter.
The cost of these components is approximately 2871 Thai baht per pair of Speedos. No contractual agreement exists between Blades plc and the Thai exporter.
Consequently, the cost of the rubber and plastic components imported from Thailand is subject not only to exchange rate considerations but to economic conditions (such as inflation) in Thailand as well.