An Indian multinational corporation has a subsidiary in the US. It just signed a 3-year contract with a US firm to provide logistical and financial services, with the Indian firm paying US$2.5 million every 6 months for the 3-year period. The current exchange rate is 1USD = 83 Rupees.

Assume that a currency swap is possible with the following terms:

Tenor = 3 years

Fixed rate = 5.4% on Rupees

Fixed rate = 5.0% on US$

Design a currency swap arrangement for the Indian firm to hedge its foreign currency risk. What effect does your swap arrangement have on the Indian firms future exchange rate between US$ and Rupees.