Explain how an Australian company could hedge its net HUF (Hungarian forint) payables using a BSI money-market hedging strategy.

Posted: January 10th, 2022

Explain how an Australian company could hedge its net HUF (Hungarian forint) payables using a BSI money-market hedging strategy. Illustrate your answer based on the company having a HUF200 million payable due in 180 days. Assume a spot rate of AUD/HUF206.90–99, a Hungarian interest rate of 8.00 per cent per annum and an Australian interest rate of 4.50 per cent per annum. (LO 17.3)