Reference no: EM132328738

On March 11, 2011 a devastating earthquake and subsequent tsunami struck Japan, causing widespread destruction. Very often, people associate "bad event = currency depreciation". This is not always logical. Immediately following the earthquake, the value of the Yen spiked up to 75 ($0.0133 / ¥). A suggested primary reason was the repatriation of insurance proceeds. In order to pay insurance claims, insurers had to sell off assets held abroad and bring the proceeds to Japan. In late 2011, you are approached by the HP Inc CFO. He is asking you to assist with a negotiation with Canon. HP stands to lose quite a bit of printer profitability with the Yen at 75. He suggests that HP Inc. renegotiate the contract with Canon to be dollar-based. How would you like to respond? Your response should consider both your expectations of the future relative values of the Yen and Dollar, as well as HP's exposures and abilities to manage those exposures.