How is the location of a manufacturing base dependent on foreign exchange rate of a country's currency?

What will be an ideal response?

In deciding where to locate a manufacturing base, costs of production will be determined in part by the prevailing foreign exchange rate for the country's currency. Exchange rates can be volatile and many companies pursue global sourcing strategies from a "portfolio" of countries and in a range of currencies as a way of limiting exchange-related risk. At any point in time, what had been an attractive location for sales or production may become much less attractive due to exchange-rate fluctuations. The prudent company will incorporate exchange volatility into its planning assumptions and be prepared to prosper under a variety of exchange-rate relationships.
Dramatic shifts in price levels of commodities and currencies are a characteristic of the world economy today. Such volatility argues for a sourcing strategy that provides alternative country options for supplying markets. With alternative production locations, if any location is in a country with a seriously overvalued currency, a company with productive capacity in other locations can maintain its competitive advantage by shifting production to competitively valued country locations.