Michael Lyons, owner of World Athletics company which is based in Glasgow, United Kingdom, is concerned about the value of the Bermudian dollar over the next few months because his firm receives Bermudian dollars as payment for tennis rackets exported to Bermuda. A local bank has informed him that the Central Bank of Bermuda will most likely intervene directly in the foreign exchange market by flooding the market with Bermudian dollars.

i. Will the Bermudian dollar weaken or strengthen based on the information provided? Use solid arguments to support your claim. ii. How would the performance of World Athletics company be affected by the Central Bank of Bermudas policy of flooding the foreign exchange market with Bermudian dollars? Assume that World Athletics does not hedge its exchange rate risk. World Athletics domestic currency is the British pound.