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Why forward hedging is better than futures hedging

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Reference no: EM133072355

Information about Firm XYZ:

1. The firm imports high quality wool to France from foreign suppliers located in Australia and the New Zealand.

2. The firm exports leather goods to USA from France.3. The firm exports designer clothes from France to Australia, New Zealand and Singapore.

4. The firm has a payment of 8,000,000 AUD due in 3 months to their supplier in Australia, a payment of 6,000,000 NZD due in 2 months to their supplier in New Zealand.

5. The firm is due to receive 8,000,000 AUD from their customer in Australia in 2 months, 4,000,000NZD from their customer in New Zealand in 2 months, 700,000 SGD from their customer in Singapore in 1 months, and 5,000,000 USD from their customer in USA in 2 months

6. The firm is concerned with the impacts of the potential high inflation rate due to the recent expansionary monetary policy globally in their exporting and importing business

I have chose Forward hedging as my hedging strategy, please explain why forward hedging is better than futures hedging in this case.

Reference no: EM133072355

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