companies that sell products abroad but whose costs are mostly domestic, have negative local currency exposure. Companies that buy goods from abroad for resale in their domestic market have positive local currency exposure. Why is it so? Anyone care to explain further the link? Thank you.
When your costs are domestic and the currency appreciates relative to your market area, your costs are essentially higher. When your costs are based in a foreign currency, you would want that currency to depreciate in order to buy them “cheaper.”