Cash Flow Sensitivity to Exchange Rate Movements The Central Bank of Poland is about to engage in indirect intervention later today, by which it will lower Poland’s interest rates substantially. This will have an impact on the value of the Polish currency (zloty) against most currencies because it will immediately affect capital flows. Missouri Co. has a subsidiary in Poland that sells appliances. The demand for those appliances is not affected much by the local economy. Most of the firm’s appliances produced in Poland are typically invoiced in zloty and are purchased by consumers from Germany. The subsidiary’s main competition is from appliance producers in Portugal, Spain, and Italy, which also export appliances to Germany.
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