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Research Paper | Business Management | Indonesia | Volume 6 Issue 6, June 2017 | Rating: 6.9 / 10
Comparative Analysis of Import Payable Transactions at the Time of Open Position and the Use of Hedging Currency Techniques [Case Study : PT. PINDAD (Persero)]
Muhammad Mara Ikbar, Taufiq Faturohman
Abstract: . Indonesia began to implement a system of free floating exchange rate (submit entirely with market mechanism) in the period of 1997 until now. Since mid-July 1997, rupiah is under pressure, caused by the currency turmoil that hit Thailand and spread to another ASEAN countries, including Indonesia. The exchange rate crisis is not only resulted in soaring prices, but also resulted in enough contraction of the economy. The depreciation of the exchange rate also has a major impact on the financial condition of companies that conduct international trade, especially for companies that has debt in foreign currency, because the amount of debt to be paid increases. As a SOE (State Owned Enterprises) PT. PINDAD in its business practices are still using imported materials from abroad because domestic industry has not been able to produce it domestically. With this import mechanism and Rupiah trends is tend to depreciate against USD in past few years (2013 2016), PT. PINDAD suffered transaction exposure from foreign exchange transaction. This resesrch purpose is to make an analysis of best hedging strategy to minimize the transaction exposure borne by PT. PINDAD at minimum cost. This research is using historical data method of import debt of PT. PINDAD period of May 2013 until October 2016. This study compared the PT. PINDAD import debt at the time of open position and when using hedging techniques namely forward contract hedging and money market hedging. Furthermore, statistical analysis used in this research is t-test, to observe whether a statistically significant difference exist between different technique. More over, risk measurement is conducted using average range of exchange rate and its standard deviation between L/C issuing date and L/C expired date of PT. PINDAD. The results of this research show that, based on the analysis and calculation of total value of debt to be borne by PT. PINDAD at the time of open position and when using forward hedging and money market hedging respectively Rp.1.514.926.444.680.02, Rp 1.465.477.258.983 and Rp 1.466.280.938.298, 96. More over this analysis shows that using hedging technique is more beneficial when Rupiah is depreciate against USD within the PT. PINDAD import transaction. Vice versa not doing hedging technique is more beneficial when Rupiah apreciate against USD. In addition, the t-test results shows that each method of Open Position, Forward Hedging and Money Market Hedging have significant differences with each other. Furthermore, from the result of risk measurement, the least risky hedging method is forward hedging, its proved by the value of the average range of exchange rate and standard deviations of forward hedging has the smallest value compared to other methods used in this research with value. In conclusion this study suggests PT. PINDAD to conduct forward hedging when Rupiah is likely to depreciated against USD. In contrast Open Position is more beneficial when Rupiah is likely to apreciated.
Keywords: Hedging technique, Market Risk, Currency Risk, Exchange Rate
Edition: Volume 6 Issue 6, June 2017,
Pages: 169 - 175