Zorex Software Bhd is a fast-growing Malaysian company involved in the import and export of computer components with US. To minimize the foreign currency risk, Zorex Software uses the forward and money market to hedge its foreign currency exposure. The following transactions are due within the next three months. The company policy is to state all transactions in the specified currency.

Assume that it is now June.

1. A recent economic forecast for the South East Asia region, published in a local business journal, suggested that annual inflation over the next 12 months in Malaysia is expected to be 1.0%, while in the USA it is expected to be 3.0%. Calculate the expected exchange rate in one years time and comment on the rate. Please do it as soon as possible, thanks!!!

Exchange rates Interest rates