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Mauritius Considers Starting Foreign-Exchange Futures, Bank Governor Says
Mauritius is may introduce foreign- exchange futures contracts to complement swaps to boost competition, central bank Governor Rundheersing Bheenick said.
The bank, which is based in Port Louis, also plans to post a central rate at which it is prepared to “conduct sale and purchase operations” for large-volume foreign-currency transactions, Bheenick said in a speech dated Aug. 26 and published on the bank’s website today.
“We introduced short-term foreign-currency swaps when in our monitoring of the foreign-exchange market we had observed that exporters were holding back their export proceeds,” Bheenick said. “The bank is now considering introducing foreign-exchange futures to complement the swaps.”
The Indian Ocean island nation’s government warned that the strength of the rupee against the euro is hurting the economy, hampering tourism and undermining exports. Mauritius earns most of its currency from foreign visitors and shipments of sugar, clothing and textiles. About two-thirds of tourists are from Europe, figures from the statistics office show.
A swap is an agreement between two parties to exchange their periodic interest-rate payments based on a set amount of money, though in different currencies, for a set amount of time and typically involves the exchange of principal so that each party has an asset that can generate interest payments. Futures are exchange-traded agreements to buy or sell assets at a set price and date. They often are bought as a bet on price fluctuations and sold before the delivery date.
‘Anti-Competitive Behavior’
Bheenick said the introduction of currency futures is part of measures to curb anti-competitive behavior in the money market.
While the foreign-exchange market is functioning better and currency movements are less volatile, the central bank is not ignoring the plight of exporters and the tourism industry, he said.
The rupee appreciated 1 percent versus the euro-zone currency to 39.1606 by 2:30 local time. It has rallied 11 percent against the euro this year.
To contact the reporter on this story: Gordon Bell in Johannesburg at gbell16@bloomberg.net
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