Central Bank to encourage mechanism to mitigate commodity price risk
Thursday, 13 September 2007
Bangladesh Bank Governor Salehuddin Ahmed has assured businesses of taking initiative to encourage developing a mechanism for mitigating the risk of volatility in commodity prices.
"We need to devise our own mechanism to protect against the increasing commodity price risk," he said after inaugurating a seminar on commodity hedging in the city Wednesday, reports UNB.
Bangladesh Textile Mills Association (BTMA) and Standard Chartered Bank jointly organised the seminar titled 'Hedging of Cotton Price Risk: Commodity Derivatives' at the BTMA conference room.
BTMA President Abdul Hai Sarkar and Standard Chartered Bank Chief Executive Officer (CEO) Osman Murad also spoke at the inaugural function, seeking to allow hedging to mitigate the price volatility of commodities like cotton in the international market.
The central bank governor said the seminar would be a step forward to find out such mechanism and assured that he would consider the recommendations from the seminar.
He said commodities in terms of supply and prices are subject to volatility because of the very nature of its production with heavy influence of natural factors. Commodities in general are the most volatile among different asset groups like foreign exchange and fixed income equity.
Prices of cotton as a major industrial input have historically been very volatile in the international markets and concerns about the effects have led to efforts to stabilise commodity prices round the world, he added.
"To face the situation, it is the most common practice in the international markets for commodity importers and exporters to transfer the risks through financial instruments," said the Bangladesh Bank governor.
"We need to devise our own mechanism to protect against the increasing commodity price risk," he said after inaugurating a seminar on commodity hedging in the city Wednesday, reports UNB.
Bangladesh Textile Mills Association (BTMA) and Standard Chartered Bank jointly organised the seminar titled 'Hedging of Cotton Price Risk: Commodity Derivatives' at the BTMA conference room.
BTMA President Abdul Hai Sarkar and Standard Chartered Bank Chief Executive Officer (CEO) Osman Murad also spoke at the inaugural function, seeking to allow hedging to mitigate the price volatility of commodities like cotton in the international market.
The central bank governor said the seminar would be a step forward to find out such mechanism and assured that he would consider the recommendations from the seminar.
He said commodities in terms of supply and prices are subject to volatility because of the very nature of its production with heavy influence of natural factors. Commodities in general are the most volatile among different asset groups like foreign exchange and fixed income equity.
Prices of cotton as a major industrial input have historically been very volatile in the international markets and concerns about the effects have led to efforts to stabilise commodity prices round the world, he added.
"To face the situation, it is the most common practice in the international markets for commodity importers and exporters to transfer the risks through financial instruments," said the Bangladesh Bank governor.