August 9: The government is all set to amend the Hedging Regulation 2075 within mid-September. The regulation was introduced one and a half years ago to minimize the risk of fluctuation in foreign exchange rate for those who invest in foreign currency. However, local businessmen and investors have complained that the regulation is not clear and satisfactory.
Therefore, Nepal Rastra Bank had submitted a proposal to the Ministry of Finance to amend the regulation.
The finance ministry says preparing the amendment draft is taking some time. According to spokesperson at the ministry Uttar Kumar Khatri, the amendment will be complete within mid-September.
“The finance ministry has already prepared the amendment draft after discussing with stakeholders. Now the Council of Ministers needs to take a decision,” said Khatri, adding, “The amendment will be completed by mid-September.”
The regulation has a provision for the finance ministry to set the hedging rate, which NRB has outright rejected. The central bank has drawn the attention of the finance ministry that the foreign exchange rate is subject to change every day or any moment and therefore the hedging rate should be fixed on real time. The regulation also has a provision for the investors to sign an agreement with the ministry while fixing the rate. But the stakeholders say that the exchange rate might change while they are engaged in the lengthy process of agreement with the ministry.
Therefore, NRB officials say that the central bank must be authorised to fix the hedging rate so that it is adjusted in a systematic way with the fluctuation in foreign exchange rate.
However, a source at the central bank informed New Business Age that the finance ministry has not decided who will fix the hedging rate.