BRAC Bank has introduced a local currency 'range-forward contract', the first in Bangladesh, to safeguard companies against fluctuation risks of the dollar-taka exchange rate.

The range forward is a fresh derivative which helps corporate houses, engaged in international trade, to save their money through staying in a price band.

The bank has recently signed a forward contract with Marico Bangladesh in Dhaka. The deal will enable Marico to cover foreign-exchange fluctuation risks with a price band, the bank said in a statement yesterday.

The first L/C opened under the contract was about $200,000.

“This innovative foreign exchange product will help corporate houses hedge their currency risk and safeguard themselves from foreign currency fluctuation risks,” said Syed Mahbubur Rahman, managing director of the bank.

“With this, the bank has covered a new area of foreign exchange derivatives previously absent in the market,” he added.

Rahmat Pasha, head of treasury of the bank, said, “It will be a milestone product for the market through which corporate houses will keep safe in the rainy days, when the currency market goes through upheavals.”

News: The Daily Star/ Bangladesh/ July-11-2011