BAFI1019: PremiumM situated in Germany, and your boss has become concerned about the current economic environment: International Finance Assignment, SIM, Singapore

You work for the firm PremiumM situated in Germany, and your boss has become concerned about the current economic environment, especially how it is related to the different types of exposure that your firm may face in the near future. You are asked to provide a report, which evaluates your firm’s exposure, the risk management implications for your firm, and possible hedging strategies for the next 6 months. You are also required to provide a recommendation for what your firm should do.

Information about Firm premium:

1. Firm PremiumM is a machinery manufacturer located in Germany.
2. The firm imports parts to Germany from foreign suppliers in Japan, South Korea and France.
3. The firm exports machines to Australia, the United States, the UK, and Norway.
4. The firm has a payment of 50,000,000 JPY due in 1 month and a payment of 50,000,000JPY due in 6 months to their Supplier in Japan, a payment of 5,000,000 USD due in 3 months to their Supplier in South Korea, and three payments of 2,000,000 EUR to their Supplier in France due in 1 month, 3 months and in 6 months, respectively.
5. The firm is due to receive 5,000,000 AUD and 5,000,000 EUR from their customer in Australia in 3 months, 6,000,000 USD from their customer in the US in 3 months, 6,000,000 GBP from their customer in the UK in 6 months and 60,000,000 NOK from their customer in Norway in 3 months.
6. The firm is concerned about the impacts of the high inflation rate globally on its business.
7. The firm is also concerned about the impacts of a series of interest rate rises globally on the firm.