Embraer of Brazil is one of the two leading global manufacturers of regional jets$($Bombardier of Canada is the$$ other$).$ Regional jets are smaller than the traditional civilian airliners produced by Airbus and$$ Boeing, seating between $50$ and $100$ people on average. Embraer has concluded an agreement with a regional U$.$S$.$ airline to produce and deliver four aircraft one year from now for $$$$76$ million.

Although Embraer will be paid in U$.$S$.$ dollars, it also possesses a currency exposure of inputslong dashit must pay foreign suppliers $ $23$ million for inputs one year from now$($but they will be delivering the subcomponents throughout the$$ year$).$ The current spot rate on the Brazilian real$($R$$)$ is $$R$$1\mathrm{.}8061/$$$,$ but it has been steadily appreciating against the U$.$S$.$ dollar over the past three years. Forward contracts are difficult to acquire and are considered expensive. Citibank Brasil has not explicitly provided Embraer a forward rate$$ quote, but has stated that it will probably be pricing a forward off the current $3\mathrm{.}75\%$ U$.$S$.$ dollar eurocurrency rate and the $11\mathrm{.}25\%$ Brazilian government bond rate. Advise Embraer on its currency exposure.