Currency exchange rate between two currencies

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ABC Company, a company based in Argentina, is building a factory in neighboring Chile. The currency used in Argentina is the Argentine Peso, whereas the currency used in Chile is the Chilean Peso. Currently, the exchange rate between these two currencies is 1 Argentine Peso = 8 Chilean Pesos.

ABC Company plans to pay a Chilean contractor 10 million Chilean Pesos to build the factory in ten equal installments over the next two years and ABC Company will need to convert Argentine Pesos into Chilean Pesos each time for each payment. Which of the following should ABC Company pursue in order to best protect the company from negative movements in the currency exchange rate between these two currencies over the next two years?

Reference no: EM132859496

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