Matakuliah
Tahun
: Keuangan Internasional
: 2009
Measuring and Managing
Real Exchange Risk
Pertemuan 9
Off Class
Soal 1
• Exercise (Question 2)
Lands’ End is a U.S mail order company that sells
clothing primarily from catalogs. Initially, all its catalog
prices were quoted in U.S dollars, but recently, the
company has expanded and begun printing catalogs
with prices denominated in British pounds. Given that
the company wants to stand behind its prices for
several months, what should the company do if the
dollar pound exchange rate changes ?
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Jawaban Soal 1
We know that Lands End will have to stand behind the pounddenominated prices that it prints in its catalogues for distribution
in the UK. British customers want to see pound-denominated
prices. They are not interested in looking up an exchange rate to
see how many pounds they will have to pay by dividing dollar
prices by the dollar-pound exchange rate. Furthermore, saying
“Prices are subject to fluctuations due to possible depreciation of
the pound” is a non-starter. People will just put the catalogue
down. Thus, a depreciation of the pound will certainly result in a
loss of revenue and an appreciation of the pound will enhance
revenue. If Lands End is concerned about the currency risk, they
can engage in hedging, especially after they gain an
understanding how well their products will sell. They can then
hedge the expected revenue in the forward market.
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•
Soal 2
Exercise (Problem 1)
Suppose that you have one domestic production facility
that supplies both the domestic and foreign markets.
Assume that the demand for your products in the
domestic market is Q = 2,000 – 3P and in the foreign
market, demand is given by Q* = 2,000 – 2P*.
Assume that your domestic marginal cost of production
is 600. If the initial real exchange rate is 1, what are
your optimal prices and quantities sold in the two
markets ? By how much will you change the relative
prices of your product if the foreign currency
appreciates in real terms by 10 % ? What will ypu do
to production ?.
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Soal 2
From the domestic demand curve, we find that P = (2,000 – Q) / 3, and
revenue from domestic sales is
P × Q = [(2,000 × Q) – Q2] / 3
We know that when the monopolist sells output in the foreign market, the
domestic real value of revenue from foreign sales is the real exchange rate,
RS, multiplied by the foreign relative price, multiplied by foreign sales, or
by substituting P* = (2,000 – Q*) / 2, we find that domestic real revenue from
foreign sales equals
RS × P* × Q* = [(RS × 2,000 × Q*) – RS × Q*2] / 2
The domestic marginal cost of production is constant at 600, and the total
cost of production is the per-unit cost multiplied by the total quantity
produced for sale in each of the two markets, or 600 × (Q + Q*).
A profit-maximizing monopolist produces an amount of the good such that
the marginal revenues earned from sales in each market are each equal to
the common marginal cost. The domestic marginal revenue is (2,000 – 2Q) /
3. Thus, the monopolist should sell a quantity in the domestic market that
satisfies (2,000 – 2Q) / 3 = 600
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Soal 2
or, by solving for Q, we find Q = 100. The monopolist charges P = 633.33 to
achieve sales of 100.
The marginal revenue from the foreign market is
(RS × 2,000 – RS × 2Q*) / 2.
The optimal quantity in the foreign market satisfies
RS × 1,000 – RS × Q* = 600
or, once again solving for Q*, we find
Q* = [1,000 – (600 / RS)]
At the initial real exchange rate of 1, the monopolist should sell 400 in the
foreign market by charging the relative price of 800. The total real profit
would be
(633.33 × 100) + (800 × 400) – [600 × (100 + 400)] = 83,333
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Soal 2
Now, if there is a 10% real appreciation of the foreign currency, the new real
exchange rate is 1.1. The real appreciation of the foreign currency benefits
an exporting monopolist because the domestic value of real revenue in the
foreign country is now
1.1 × [(2,000 – Q*) × Q*] / 2
By equating the foreign marginal revenue to the unchanged domestic
marginal cost of 600 and solving for Q*, we find
Q* = [1,000 – (600 / 1.1)] = 454.55
In order to sell the 454.55 units in the foreign market, the
monopolist must lower the foreign price per unit to
P* = (2,000 – 454.55) / 2 = 772.73
Because the marginal cost of production is constant, the domestic price
per unit remains at 633.33, and the domestic sales remain at 100. Notice
that although the foreign currency appreciates by 10%, the monopolist only
decreases the relative price in the foreign market by 3.4% because the ratio
of the new foreign price to the old foreign price is
772.73 / 800 = 0.966
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Soal 3
• Home Work
Soal 3, merupakan tugas perorangan yaitu setiap
mahasiswa diwajibkan untuk menjawab pertanyaan
(Question dan Problem) yang ada disetiap akhir bagian
masing-masing chapter.
Tugas ini dikumpulkan sebelum perkuliahan pertemuan
berikutnya dimulai.
Mahasiswa menjawab Question 5, 8 dan Problem 3 yang
ada di halaman 333
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