Monday, March 31, 2008

Safaricom IPO: Forex hedging in Uganda

Afrika Investment Bank has entered a "Forward" partnership with selected Ugandan banks to transact Safaricom Initial Public Offer (IPO) at a fixed Uganda shilling share price.

The "Forward" contract safeguards clients from the instability and anticipated fluctuations of foreign exchange transactions by fixing the market rate of a currency before the actual transaction. In this case Ugandans who may want to buy shares in the Safaricom IPO but have to buy Kenyan shillings first will do it at a fixed rate of $0.08 (Ush140) equivalent of Ksh5.

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