Danareksa May Suffer from Derivative Loss

State-owned financial services company PT Danareksa may suffer from loss on derivative transaction if the rupiah exchange rate against the US dollar stays at IDR12,100 until the mid-year.
The transaction confided Danareksa had contract agreements worth US$48 million or IDR576 billion on US dollar sale option with two banks, PT Bank Permata Tbk and Standard Chartered Bank. Danareksa has option contracts to sell the US dollar to the two banks at around IDR10,000.
If the rupiah exchange rate against the US dollar stayed at IDR12,100, Danareksa would suffer from loss. On the other hand, if the rupiah exchange rate against the US dollar soared to less than IDR10,000, Danareksa would be able to rake money in.
Outside Danareksa, other companies doing derivative transactions are PT Aneka Tambang Tbk (Antam), PT Timah Tbk, and PT Elnusa Tbk.
Option, one of derivative transaction instruments, is an agreement giving the buyer an option rights to realize foreign currency sales and purchase agreements at the exchange rate of the time the agreements were made.
Danareksa had had one-year derivative contracts since September 2008, meaning the state-owned enterprise had posted loss in the fourth quarter of 2008 in the wake of weaker rupiah against the US dollar.