3. Siam Cement. Siam Cement, the Bangkok-based cement manufacturer, suffered enormous losses with the coming of the Asia

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3 Siam Cement Siam Cement The Bangkok Based Cement Manufacturer Suffered Enormous Losses With The Coming Of The Asia 1 (45.66 KiB) Viewed 31 times

3. Siam Cement. Siam Cement, the Bangkok-based cement manufacturer, suffered enormous losses with the coming of the Asian crisis in 1997. The company had been pursuing a very aggressive growth strat- egy in the mid-1990s, taking on massive quantities of foreign-currency-denominated debt (primarily U.S. dollars). When the Thai baht (B) was devalued from its pegged rate of B25.0/$ in July 1997, Siam's interest payments alone were over $900 million on its out- standing dollar debt (with an average interest rate of 8.40% on its U.S. dollar debt at that time). Assuming Siam Cement took out $50 million in debt in June 1997 at 8.40% interest, and had to repay it in one year when the spot exchange rate had stabilized at B42.0/$, what was the foreign exchange loss incurred on the transaction?