Maschinenbau Arrau AG (A)

In February 1996, Merton Electronics was reviewing its currency risk position. Its principal foreign suppliers were Japanese and fluctuations of the dollar/yen exchange rate during the past 2-3 years seemed to have had a serious impact on costs and earnings.

This is a case study on foreign borrowing alternatives.

Great Eastern Toys (D) The company faced currency risk on its sales to European markets, and on some Yen loans it had taken. Because the HK$ was pegged to the US$, currency risk on its American sales was seen as practically nil.