We saw over the course of the semester that Blades had established a significant market for its product in Thailand. However, due to local competition, it has little power in setting the Thai baht (THB) price when selling its rollerblades in Thailand. Thailand consistently has higher inflation rates than the U.S. and this is expected to continue long into the future.

Discuss the limits that Blades has in reducing this long-term exchange rate risk using derivatives.

If Thailand is to continue to be a major market for Blades product, what alternative approaches could Blades use to reduce its long-term exchange rate risk and how would they work?