**You are the CFO of a US firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. What actions, if any, should you take?
**What would you do if the Mexican peso did not depreciate by 30%, but rather increase by 30%? How would your strategy change? Would you decrease your inventory until the peso decreased back to normal levels? How would that impact sales in the US