Not sure if this is the perfect forum for this but here goes. I'm working tonight on a writeup for an emerging markets-focused credit fund on a company.
In financial models for foreign companies, what are best guidelines for flowing exchange rate changes through the statements? In this case all results are reported in USD, but revenues and costs are local. The company (like anyone else in this position) tends to have deteriorating results when the currency depreciates and/or inflation rises (correlated). I'm having trouble creating rules of thumb to adjust revenues and expenses based off currency movements in a logical way.
Any ideas appreciated!
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