Analysis on the implementation of currency hedging through forward contract toward PT. Celectric Indonesia

Marshella, Marshella (2012) Analysis on the implementation of currency hedging through forward contract toward PT. Celectric Indonesia. Bachelor thesis, Universitas Pelita Harapan.

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Abstract

In this globalization era, the number of companies conducting international trade activity is likely to keep growing. This activity results in the occurrence of foreign exchange transaction and therefore causes company to face currency risk derived from the unpredictable exchange rate movement. The movement is determined by both internal and external factors. Since this risk may influence @KIL>JUXO performance, company needs to manage the risk appropriately. Currency hedging implementation through forward contract is one technique that can be utilized. In this study, data collection and processing was performed by conducting several observations, interviews, and calculations. A forward contract was restructured and the result was analyzed to present the possible outcome and comparison of @KIL>JUXO LNKCFP>?FHFPy and cash flows if the contract had been implemented in the past. The study result indicates that forward contract engagement in the period under study could generate transaction gain for the company, but the loss incurred would be greater than the gain obtained. Moreover, it would also decrease profit and increase cash outflow of the company although the impact would not be very significant.

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