Suppose that Lendlease, an Australian construction company, wants to enter a tender process to build a new airport in Indonesia. The company must submit its bidding application by the end of August, but won't know the outcome by 1 Dec, 2022.

Lendlease worries that the A$ cost of construction would be inflated if our currency is weakening (against the US dollar and Indonesian Rupiah) over the next 3 months Therefore, it would like to use either a forward contract or an option contract to protect it from foreign exchange exposure. Also assume the Lendlease would use debt financing, via a loan from Australian banks or domestic bond sales, for this project if it wins the bid.

Which derivative contract would you recommend to Lendlease? In your discussion, you may want to consider a scenario in which banks don't offer a derivative contract between A$ and Rupiah.