Protecting against euro resurgence

Background: With the rapid run-up in the euro, a Hong Kong-based buyer of euro against the dollar on a monthly basis has missed the chance to hedge forward at a budget rate of 1.1250. Now there has been a retracement from the highs, and he is eager to put some hedges in place for the next 12 months to protect against a resurgent euro.

Problem: Unfortunately the buyer’s budget rate is still much lower than the current average forward at 1.1550. Any proposed hedge must be zero premium. It should

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