Need help with reasoning the answer to the following question!

I am bit stuck on a question regarding FRA Reading 20 under Multinatinational Operations: Pedro Ruiz is an analyst for a credit rating agency. One of the companies he follows, Eurexim SA, is based in France and complies with International Financial Reporting Standards (IFRS). Ruiz has learned that Eurexim used EUR220 million of its own cash and borrowed an equal amount to open a subsidiary in Ukraine. The funds were converted into hryvnia (UAH) on 31 December 20X1 at an exchange rate of EUR1.00 = UAH6.70 and used to purchase UAH1,500 million in fixed assets and UAH300 of inventories. Ruiz is concerned about the effect that the subsidiary’s results might have on Eurexim’s consolidated financial statements. He calls Eurexim’s Chief Financial Officer, but learns little. Eurexim is not willing to share sales forecasts and has not even made a determination as to the subsidiary’s functional currency. Absent more useful information, Ruiz decides to explore various scenarios to determine the potential impact on Eurexim’s consolidated financial statements. Ukraine is not currently in a hyperinflationary environment, but Ruiz is concerned that this situation could change. Ruiz also believes the euro will appreciate against the hryvnia for the foreseeable future. Q2. Given Ruiz’s belief about the direction of exchange rates, Eurexim’s gross profit margin would be highest if it accounts for the Ukraine subsidiary’s inventory using: A)FIFO and the temporal method. B) FIFO and the current rate method. C) weighted-average cost and the temporal method. Can someone explain why the answer is not FIFO and Temporal Method???

I think I’ve got it, here’s how I see it—hopefully someone can jump in if there’s an error here.

Assuming prices of goods are stable or inflating, using FIFO will assure you’re using the lowest cost possible inventory for your COGS. Good for GP.

Also, the temporal method will use the historical FX rate for inventory, and if the euro appreciates over time then that means during the year the hryvnia is “growing” as it depreciates, so that when you look at the figures to translate at the end of the year, you’re using an FX rate for COGS that makes the COGS figure smaller, but you’re subtracting that from a relatively larger revenue figure, which is based on an average FX rate that must be at least a little bigger in terms of hryvnia per euro if the euro is appreciating as expected. And you’re using the FIFO method—so your historical acquisition FX rate for inventory is “pinned” at the very beginning of these historical rates, giving you the lowest of the low rates. That would enhance GP also.

Hyperinflation would restate everything before translating at the current FX rate, which would also be a higher GP based on your FIFO method alone.