1. Firm SV is an agricultural machinery manufacturer located in Australia.

2. The firm imports parts to Australia from foreign suppliers in Japan, South Korea and Germany.

3. The firm exports machines to New Zealand, the United States, Germany and Norway.

4. The firm has a payment of 70,000,000 JPY due in 1 months and a payment of 60,000,000JPY due in 6 months to their Supplier in Japan, a payment of 3,000,000 USD due in 3 months to their Supplier in South Korea, and two payments of 3,000,000 EUR to their Supplier in Germany due in 3 months and in 6 months, respectively.

5. The firm is due to receive 10,000,000 NZD and 10,000,000 AUD from their customer in New Zealand in 3 months, 7,000,000 USD from their customer in US in 3 months, 8,000,000 EUR from their customer in Germany in 6 months and 80,000,000 NOK from their customer in Norway in 6 months.

You are required to prepare a report, which should contain the following information:

1. List the future spot exchange rates (currency pairs) that directly affect your firm and form a forecast for each of these future spot exchange rates. You need to briefly analyse the factors affecting these exchange rates and then form your forecasts.

2. Discuss and evaluate the types of exposure your firm may face as well as the other main concerns for your firm. In your discussion, you should consider the effects of the current economic environment on the foreign exchange market and the competitiveness of the products produced in Australia, and relate this to how this may impact the firm. Particularly, you need to discuss the potential impacts of high inflation and interest rate hikes on the firms business.

3. Please design hedging strategies for the firm. You need to explain why your chosen hedging strategies are better than the other strategies by evaluating the hedging outcomes what will the outcomes be if exposures are hedged using your hedging strategies and what will the outcomes be if exposures are not hedged or using other hedging strategies. Please also discuss the impacts of hedging currency exposure on the firms cost of capital and firm value.

4. You need to consider the interlinkages between local, national and global dynamics when conducting your analysis.

5. You need to navigate the digital landscape and use appropriate digital tools, e.g., EIKON, to find relevant information and data to complete the tasks. You need to provide the sources of data used in your report.