A company imports materials from USA at a cost of $1 068 000,which is payable in 6 months' time. The operations director has suggested that the company should not hedge the exchange risk as the firm will continue to import in the longer term and that the cost of hedging is very expensive. The following exchange rates and interest rates are given. Determine whether the company should select a forward contract or a money market hedge if it wishes to minimize the cost of hedging the currency exposure.
