Question:

A U.S. firm buys merchandise from a Portuguese company at a cost of EUR 250,000. The merchandise will not be delivered for six months and , therefore, the U.S. firm does not have to pay for the product until it's delivered. If the current EURUSD exchange rate is 1.2100 U.S. dollars per euro an the U.S. firm chooses not to hedge any of its currency risk, the U.S. firm will effectively be paying more for the merchandise (i.e. lose money) if the EUR USD exchange rate moves in which direction?

Please provide me with detailed answer.

Thank you so much!!