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Paper Topic:

International Business

p A on The Curse of the Strong Dollar

In full retrospect with the operations of STMicro , it is very possible that the fall of the value of the US Dollar could have been predicted in 2003 . During that time , America has already been implementing its war on terrorism which gauged more government expenditure on military services and research . The US economy has also been on the downside even before the war stated and was already on the brink of recession even before 9 /11 . If the finance department of STMicro was observing

the fiscal background of the US at that time , he would have deduced that the events could eventually lead to a possible devaluation of the dollar and in turn hurt the profitability of the company

The profitability of STMicro was further aggravated by the adoption of the Euro of majority of the European economies . The Euro started circulating as a legal tender in January 1 , 2002 . Combining fiscal measures and attributes of 16 of the 27 EU member states , it can be assumed that this would impact the status of the US dollar as the primary currency used . With this in mind , STMicro can predict that the state of the US economy as well as the circulation of the euro in Europe can and would eventually affect the company 's operations in Europe

One detrimental factor on this case is the inability of STMicro to implement currency hedging policies which deeply hurt the company 's profitability in...

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