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Forward versus Money Market Hedge on Payables. Assume the following information: 90day U.S. interest rate = 0.04 90day Malaysian interest rate = 0.04 90day forward

Forward versus Money Market Hedge on Payables. Assume the following information:

90day U.S. interest rate = 0.04

90day Malaysian interest rate = 0.04

90day forward rate of Malaysian ringgit = $0.400

Spot rate of Malaysian ringgit = $0.404

Assume that the Santigo Co. in the United States will need307,180 ringgit in 90 days. It wishes to hedge this payables position.

How much more (or less)would the money market hedge cost than the forward hedge?

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