High-Profile Printers, Inc. (HPP) of the United States exports computer printers to Bracil, whose currency, the real (symbol R\$) has been trading at R\$1.8000/USS. Exports to Brazil are currently 100,000 printers per year at the equivalent in real of \(\$ 200\) each. A strong rumor exists that the real will be devalued to RS2.0000/S within two weeks. Should the devaluation take place, the real is expected to remain unchanged for another decade.

Accepting this forecast as given, HP' faces a pricing decision that must be made before any actual devaluation: HPP may either (1) maintain the same price in real and, in effect, sell for fewer dollars, in which case Brazilian volume will not change, or (2) maintain the same dollar price, raise the price in real in Brazil to compensate for the devaluation, and experience a \(20 \%\) drop in volume. Direct costs in the United States are \(60 \%\) of the U.S. sales price.

What would be the short-run (one-ycar) implication of each pricing strategy? Which do you recommend?