International Business 13th Edition by Donald Ball,Michael Geringer,Michael Minor ,Jeanne McNett

Exercise 2

You are the finance manager of an American multinational that has sold US$6 million of your high-tech product to a Chinese importer. Because of stiff competition for the contract against European and other American companies, you agreed that the negotiators could sign a renminbi-based contract, although this is not standard practice for the firm. This concession may have won you the deal, actually.
The sales contract calls for the Chinese importer to make three equal payments at 6, 12, and 18 months from the date of delivery, which is in 60 days. Your plan is to translate the renminbi to dollars on their receipt; your company has no operations in China and no need for the currency. You realize, though, that this arrangement involves transaction exposure. How could you cover this risk?