Muller Industries is a U.S. multinational that just bought CAD11 million of goods on account payable in 30 days to a Canadian supplier. The spot exchange rate is USD0.792/CAD, while the 30-day forward rate is USD0.813/CAD. Muller is interested in hedging this account payable by using a money market hedge. If the 30-day periodic investment rate in Canada is 0.20%, and the 30-day periodic investment rate in US is 0.50%.

1. Please construct a strategy that hedges Cullen from currency exposure using a money market hedge. You need to include all the details and all the steps to complete the strategy. I need to see the verbal explanations of the hedging procedure in addition to the math calculation.

2. Using the money market hedge, how many US dollars would you pay 30 days later? What is the effective exchange rate that you have locked in using money market hedge?