#TITLE_ALTERNATIVE#

• Main Author: WIDYA RAMADHAN (NIM 19005049), DIAS
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/10237
• Institution: Institut Teknologi Bandung

Risk Management has become a popular research topic for the last twenty years. It is caused by the benefit that company can get if they do risk management. One type of risk is foreign exchange risk. This type of risk deals with managing volatility of exchange rate. Company that has huge foreign exchange (forex) exposure will get the most benefit of applying this risk management.<p> <br /> <br /> <br /> <br /> Telkom is one of the biggest companies in Indonesia. Telkom provides information and communication (InfoComm) services. Telkom has huge forex exposure largely from its foreign debt and capital expenditure. This fact indicates that Telkom need to have foreign exchange risk management, the benefit of doing so will outweigh the cost.<p> <br /> <br /> <br /> <br /> In this research, researcher tries to find the best foreign exchange risk management strategy to be applied in Telkom. In doing so, researcher looks at previous research to be the theoretical foundation. Primary data from existing strategy in Telkom also become the foundation to make the proposed model.<p> <br /> <br /> <br /> <br /> From the research, researcher finds that existing strategy in Telkom is inefficient. There are many factors that support the statement, includes: the requirement forex reserves is very high, type of savings is not flexible, forecast error has very big value, and the hedging strategy is using money market method. It is the researcher intention to make proposed model that can increase the benefit for the company and also decrease the cost involved. Based on thorough calculation and analysis, researcher comes up with the proposed model. The model can be summarized as follows: the minimum requirement of forex reserves is budgeted amount from forecasting method added with standard deviation as the safety factor, use savings account to be more flexible, and make hedging contract with counterparty to share the forex risk.<p> <br /> <br /> <br /> <br /> After doing comparison between existing strategy and proposed model, it can be concluded that the proposed model is more effective in doing foreign exchange risk management. It is recommended for Telkom to apply the proposed model. In order to be more precise, it is recommended for the next research to calculate VAR for foreign exchange.