You and your group work for the Risk Analysis Division (RAD) at the Australian coal producer and exporter ABX Corporation. Before recently, China accounted for about 85% of ABX's sales, making it the primary importer of its coals (NB: all invoicing to Chinese export was fixed in Chinese yuan requiring no FX risk management strategy). However, the Chinese market has now been destroyed. The coal processing facilities that ABX owned in China also need to be moved. All of these factors, combined with the COVID-19 pandemic, a complex geopolitical environment, trade tensions, the war in Russia and Ukraine, and frequent policy changes at the government level, make it difficult for MNCs to make decisions about FDI and managing foreign exchange risks that are firmly established. It appears as if Black Swans pounced on the markets simultaneously. No tool for managing financial risk seems to be effective.

ABX will suffer foreign exchange risk as it enters new international markets, but the Head of the RAD is not quite sure of the exchange rates that are in effect there. Due to the unknown FX risks in Indonesia, the RAD's Head requests that your team assess at least two FX derivative strategies and make a recommendation for the optimal FX management approach.