Final answer:
The statement is true. Budgeting for a multinational company is more complex due to exchange rate fluctuations, affecting costs, sales, profits, and losses, and necessitating attention to currency market movements.
Step-by-step explanation:
The given statement is true. Budgeting for a multinational company is indeed made more complex due to the possibility of exchange rate fluctuations.
Multinational companies must contend with the constant changes in exchange rates, as their business operations involve cross-border transactions in various currencies.
For instance, when the Indian rupee depreciated from 39 rupees/dollar in February 2008 to 51 rupees/dollar in March 2009, this significant shift impacted businesses heavily involved in international trade.
Exchange rate movements affect not only the cost of imported inputs and export sales but also have repercussions on profits and losses due to the conversion of foreign revenues or costs into the company's reporting currency.
Central banks may attempt to stabilize exchange rates to allow businesses to focus on productivity and innovation rather than navigate the turbulent waters of foreign exchange markets.