General Motors exports cars to Spain. In the Spanish market, GM faces competition from the Italian and French car makers, such as Fiat and Renault, whose operating currencies are the euro. Which of the following is correct?

1. The weak dollar against the euro will hurt sales of GM cars in Spain.

2. The strong dollar against the euro will help sales of GM cars in Spain.

3. Locating production facilities in Spain and source inputs locally will reduce operating exposure.