Exchange Rate and Transaction and Translation Exposure” Please respond to the following:

•Analyze the major effects that relative interest and inflation rates could have on a country’s currency. Suggest the crucial steps that a company could take in order to minimize the adverse effects of currency fluctuations.

•Evaluate the efficiency of two (2) of the most common currencies / foreign exchange derivatives that companies use in order to minimize translation and transaction exposure. Give one (1) example of an instance where entities such as MNCs, banks, hedge funds, and insurance companies should use each derivative. Provide a rationale for your response.