Question 6 Wesfarmers is one of Australia's largest companies. On its website, it states the following in reference to FX risk management: The Groups policy is to protect the Group from currency fluctuations together with maintaining the integrity of business decisions and protecting the competitive position of the Groups activities. The Groups primary currency exposures are in US Dollars and arise

from sales or purchases by an operating unit in currencies other than the units functional currency. The Group requires all of its operating units to hedge foreign exchange exposures for firm commitments relating to sales or purchases or when highly probable forecast transactions have been identified. Before hedging, the operating units are also required to take into account their competitive position. Operating units are not permitted to speculate on future currency movements. What type of FX risk has Wesfarmers identified and what aspects of its FX risk policy formulation can be identified? [10 marks] Click or tap here to enter text.