Country X typically has a high interest rate, and its currency is expected to strengthen against the dollar over time. Country Y typically has a low interest rate, and its currency is expected to weaken against the dollar over time. Both countries have imposed a blocked funds restriction over the next four years on the two subsidiaries owned by a U.S. firm. Which subsidiary will be more adversely affected by the blocked funds, assuming that there are limited opportunities for corporate expansion in both countries?

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