Question

If you're a U.S.-based company selling your product in the U.K., how does moving production to the U.K. hedge you against economic exposure?

Answer 1

economic exposure means when companies margin are been exposed to exchange rates fluctuations

economic exposure management is managing the economic or the operational risk

so companies use operational or currency risk mitigation strategy

operation strategy includes diversifying production centres rather than concentrating it to one or two centers, sourcing facilities to minimizes a company’s dependence on any given currency

Currency risk mitigation strategies: from common forward and futures contracts, currency swaps and credit swaps between companies located in different countries.