You are the CEO of Partido Switch Plc, which is a multinational corporation, incorporated in the US but invests in many emerging countries including Brazil. Brazil used to have a fixed exchange regime regarding its currency . However, Brazil moved to adopt a free float exchange rate regime as from January 1999.

a) Discuss the motives of Brazil’s move and its implications on the country’s economy after the change .

b) What strategy should you employ in order to manage the exchange rate exposure resulting from the change in the currency regime?