Barclays launches new treasury product


15-December-2011

Forwards allow the buyers or sellers of foreign currency (FCY) to choose a future delivery date and to hedge their position up to one year in advance, thereby decreasing the uncertainty associated with market movement.

With this new service, buyers of FCY against SCR can now book the deal and take the delivery of FCY by paying SCR at a fixed date in the future. This will help them hedge their requirements beforehand and also avoid paying more in case the Seychelles rupee depreciates (i.e. FCY moves up).

Similarly, in the case of sellers, they can now book the deal and deliver the FCY at a future date at a pre-agreed rate. Furthermore, the sellers of FCY will also benefit from slightly higher rates compared to spot rate as is the case for most of FCY where there is a premium available. Hence, customers will be able to avoid the risk of appreciation in SCR, such as when FCY rates go down as rates will now be locked in.

Speaking about the product, of Barclays Bank (Seychelles) managing director Rakesh Jha, said: “We are proud to be at the forefront of innovation and for bringing new and exciting products to our customers. By hedging the cash flows in advance, local companies will now be able to focus more on their core areas of business by avoiding foreign exchange risks.

We are confident that this product will appeal to our customers and we will continue to bring products and services which will make banking easier for our customers.”

However, in the case of any unfavourable rate movement, the rates agreed beforehand cannot be changed and will therefore have to be maintained.

This product is widely available internationally for all the currencies and the launch of
forwards in Seychelles rupees is a very important step in the development of a local foreign exchange market.

In addition to forwards, Barclays is also offering Swaps in Seychelles rupees against major foreign currencies. In Swaps, companies can temporary hedge cash flow mismatches by converting FCY into SCR or vice-versa for a fixed period of up to one year.

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