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Daly's Import-Export Inc. (DIE) is an Australian trading company that imports large volumes of stock from Singapore. DIE is considering hedging an account payable of

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Daly's Import-Export Inc. (DIE) is an Australian trading company that imports large volumes of stock from Singapore. DIE is considering hedging an account payable of 25 million Singaporean dollars (SGD) that is due in 90 days. The exchange rate is quoted as AUD/SGD with the Australian dollar as the base rate and Singaporean dollar as the terms rate. Under DIE's policy relating to exchange rate transaction exposure, the treasurer is required to compare the results of a money market hedge relative to using forward contracts before entering into any hedging arrangements. The current spot exchange rate quote is AUD/SGD 0.9080/0.9100, whilst borrowing and investment interest rates in both countries are as follows: If a forward contract was used to hedge the exposure, the cost would be AUD 23,000,000. Specify the amount (in AUD) that DIE would save if it was to use a money market hedge for the account payable, rather than a forward contract

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