The dollar is weakening againt the rupiah. With the information from above is there a futures or options FX strategy for each currency? If so what is it? Please draw supply and demand curves explaining the answer.

Exhibit K Monthly Cashflows of Acme Industrial Pipes, India Cash Flow USD equivalent ( MM) INR equivalent (MM)' 100 0.4 USD inflow 2.0 USD outflow 0.2 INR outflow no FX linkage 2 INR outflow with FX linkage 1.2 1. Assume spot USD/INR = 50.0 2. INR expenditure that is unaffected by FX rate (e.g. INR payroll) 3. INR expenditure that can fluctuate with movement of USD (e.g. fuel, imported raw material) AIP US had set up a representative office in Indonesia for local sales in IDR. Forecasted annual inflow was the IDR equivalent of $100MM (spot USD/IDR = 9,000). With a view that USD would weaken over the next 12 months against the Rupiah barring potential sharp USD pull-backs, Asia Treasurer sought to protect IDR flows against USD weakening using Treasury Advisory Group, Citibank N.A. Page 10 forwards or options. He wondered what would be the best FX hedging strategy to achieve a superior risk-return profile. Exhibit K Monthly Cashflows of Acme Industrial Pipes, India Cash Flow USD equivalent ( MM) INR equivalent (MM)' 100 0.4 USD inflow 2.0 USD outflow 0.2 INR outflow no FX linkage 2 INR outflow with FX linkage 1.2 1. Assume spot USD/INR = 50.0 2. INR expenditure that is unaffected by FX rate (e.g. INR payroll) 3. INR expenditure that can fluctuate with movement of USD (e.g. fuel, imported raw material) AIP US had set up a representative office in Indonesia for local sales in IDR. Forecasted annual inflow was the IDR equivalent of $100MM (spot USD/IDR = 9,000). With a view that USD would weaken over the next 12 months against the Rupiah barring potential sharp USD pull-backs, Asia Treasurer sought to protect IDR flows against USD weakening using Treasury Advisory Group, Citibank N.A. Page 10 forwards or options. He wondered what would be the best FX hedging strategy to achieve a superior risk-return profile