Assume your U.S. firm currently exports to the Philippines on a monthly basis, receiving Philippine pesos in exchange. Once material is received from a source, it is quickly used to produce the product in the US and then the product is exported to the Philippines. You currently have no other exchange rate exposure than these exports. You are looking to source inputs for producing the product. You can buy those inputs (of equal quality and expected cost) from Canada or the Philippines or the US. Explain which source would be preferable, given that you would like to minimize exchange rate risk.