EV Direct Pty Ltd. is a local car importer in Australia. EV Direct just signed a purchase agreement to purchase electric vehicles from a Chinese car manufacturer--BYD. The purchase will be billed CNY 1,000,000, payable in six months. The current spot exchange rate is AUD 0.22/CNY. However, a senior manager in EV Direct worries that the future foreign exchange rate may fluctuate and hurt the amount payable. Therefore, the manager asks you, a financial risk analyst, to provide him with an appropriate hedging technique.

The following is information on the currency derivative market:

6-month CNY forward contract with a strike price of AUD 0.25/CNY

6-month CNY call option with an exercise price of AUD 0.24/CNY (premium is AUD 0.05/CNY)

6-month CNY put option with an exercise price of AUD 0.21/CNY (premium is AUD 0.04/CNY)

Interest rate in Australia is 3.5% p.a.

Interest rate in China is 4.5% p.a.

(1) You conduct due diligence research and believe that AUD will depreciate dramatically in 6 months. If your analysis is correct, will you suggest that your manager hedge against CNY payable? (Please type YES or NO) and provide one sentence for your rationale.