You are working as Finance Manager or Accounting Manager of a company located in Ontario that makes your functional currency as CAD, You have bought some products from Indi worth USD 1 million and you have to pay to the Indian supplier after 6(six) That certainly means that you do not need Indian currency today but after 6 months you will need Indian currency equivalent to 1 million CAD. You have few options to hedge your transaction and settle this global payment: (1) Forward: Enter into a Forward rate agreement with a bank/FI's in Canada. (2) Option: CALL on Indian currency or PUT on Canadian Dollar. (3) Open a FD in an Indian bank in INR. (4) Short sale US Dollars as global payments are usually settled down in USD. Compare the strategy (1) Forward with strategy and strategy (3) open a FD and decide which option is better for your company. The forward rate offered by Scotia Bank in Canada on 1" June 2023 for 1ttDec. 2023 is 1 USD = INR. 78 and forward premium is USD 13,750 . The Interest rate in Canada is giving 2% interest yearly and interest rate in India is 8% interest yearly. Part 2: If the Tax rate is Canada is 30% and Tax rate in India on the foreign companies is 40%, then which Hedging Strategy is better for your company