StanChart closes its first dollar taka option transaction
Sunday, 14 February 2010
FE Report
Standard Chartered Bank has closed its first Dollar Taka option transaction with Bangladesh Edible Oil Limited (BEOL).
This landmark deal will help BEOL to effectively manage their foreign currency exposure.
The deal signed recently was a zero cost range forward, a powerful currency hedging tool. For an importer, this derivative product is more flexible than a conventional forward because instead of locking in a single rate, they are bound within a range. The clients exposure is covered beyond a ceiling rate (cap), and the client gets the benefit of transacting in the prevailing market rate down to the lower bound (put) of the range. This provides an added flexibility beyond conventional forwards.
As the Global economy gets back on track, Bangladesh economy will be growing faster with investments and foreign currency transactions growing at a rapid pace.
"Our local companies will be required to explore more powerful and sophisticated risk management tools, as they get increasingly exposed to various types of risks. Derivatives, if used prudently, are very powerful financial risk mitigants," a StanChart statement said.
To bring dynamism and prudence in financial risk management, Standard Chartered Bank has been pioneering the development of derivatives in Bangladesh for years. The Bank completed the first currency option deal in 2006. SCB has also been the first to introduce interest rate and commodity hedging in the local market. Mr. Alamgir Morshed, Director, Head of Global Markets reiterated Standard Chartered's commitment to developing the local market, and also thanked BEOL for their keen interest in partnering with SCB in the same endeavor.
Mr. Elias Ahmed, Financial Controller, BEOL said "Fx Option acts as additional security for our company, and allows us to avail USD against BDT within a flexible limit of Upper & Lower Strike rates. Unlike the traditional forward, Fx option predominantly helps us to minimize cost for foreign exchange hedging (as there is no extra premium), and which effectively covers our Fx exposure base."
BEOL, established in 1993 is engaged in marketing of consumer pack edible oil with a household brand 'rupchanda'.
Standard Chartered Bank has closed its first Dollar Taka option transaction with Bangladesh Edible Oil Limited (BEOL).
This landmark deal will help BEOL to effectively manage their foreign currency exposure.
The deal signed recently was a zero cost range forward, a powerful currency hedging tool. For an importer, this derivative product is more flexible than a conventional forward because instead of locking in a single rate, they are bound within a range. The clients exposure is covered beyond a ceiling rate (cap), and the client gets the benefit of transacting in the prevailing market rate down to the lower bound (put) of the range. This provides an added flexibility beyond conventional forwards.
As the Global economy gets back on track, Bangladesh economy will be growing faster with investments and foreign currency transactions growing at a rapid pace.
"Our local companies will be required to explore more powerful and sophisticated risk management tools, as they get increasingly exposed to various types of risks. Derivatives, if used prudently, are very powerful financial risk mitigants," a StanChart statement said.
To bring dynamism and prudence in financial risk management, Standard Chartered Bank has been pioneering the development of derivatives in Bangladesh for years. The Bank completed the first currency option deal in 2006. SCB has also been the first to introduce interest rate and commodity hedging in the local market. Mr. Alamgir Morshed, Director, Head of Global Markets reiterated Standard Chartered's commitment to developing the local market, and also thanked BEOL for their keen interest in partnering with SCB in the same endeavor.
Mr. Elias Ahmed, Financial Controller, BEOL said "Fx Option acts as additional security for our company, and allows us to avail USD against BDT within a flexible limit of Upper & Lower Strike rates. Unlike the traditional forward, Fx option predominantly helps us to minimize cost for foreign exchange hedging (as there is no extra premium), and which effectively covers our Fx exposure base."
BEOL, established in 1993 is engaged in marketing of consumer pack edible oil with a household brand 'rupchanda'.