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Currency derivatives market contributes to foreign exchange hedging

Managing Director of Export Development Bank of Iran says the launch of currency derivatives market contributes to real hedging.
(SHADA: TEHRAN) -- Ali Saleh Abadi said that in case of high volatility of foreign currency, the Export Guarantee Fund does not have enough resources to cover currency risk, and foreign exchange hedging should be launched in the Stock Exchange.

Stating that the Export Guarantee Fund has limited capital, he said: Currency risk has different effects on different firms, and the Export Guarantee Fund must have rich resources to cover these volatilities.

Saleh Abadi stressed that foreign exchange derivatives market is needed to have real hedging and to cover fluctuations of currency risk.

Regarding the requirement for launching the foreign exchange derivatives market, he said: The Central Bank has some preconditions such as moving towards the single digit currency rate.

It seems we need more time to move towards the launch of foreign exchange derivatives market; however, I think foreign exchange derivatives market is needed to have foreign exchange hedging, Managing Director of Export Development Bank added.
 
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