Kathmandu, Feb. 9 -- KATHMANDU,

The draft regulation was tabled by the Finance Ministry, and its approval paves the way for the establishment of the fund at Nepal Rastra Bank, the country's central bank.

Hedging is a risk management strategy used to reduce the risk due to fluctuations in the asset price. The hedge fund which the central bank will set up is a type of insurance that will cover additional liability created to any party (investor or government) due to exchange rate fluctuations.

As per the draft regulation, Nepal Rastra Bank will establish and operate the fund which will cover risks due to a depreciation of the domestic currency by charging a premium, according to ministry sources.

"Any party to be eligible to receive cov...