FE REPORT |
January 27, 2025 00:00:00
The Bangladesh Bank (BB) on Sunday said banks from now on would be allowed to apply forward premium to the foreign-exchange market to maintain orderly discipline.
However, the forward premium must not exceed the policy rates of various global currencies, such as the US Dollar (USD): Federal Funds Rate, Euro (EUR): Main Refinancing Rate, British Pound (GBP): Bank Rate, Japanese Yen (JPY): Overnight Call Rate, and Chinese Yuan (CNY): Loan Prime Rate (LPR).
These rates will be determined based on the rates in effect on the banking day immediately preceding the first day of the deal period for forward transactions with customers and relevant counterparties.
The forward premium will apply to the declared spot rates for both forward sales and purchases, according to a circular issued by the central bank.
To ensure compliance, authorised dealers (ADs) have been instructed to direct their AD branches and central processing centres to meticulously follow the instructions.
The circular also warned non-compliance would result in punitive actions, including financial penalties, under relevant regulations, such as the Foreign Exchange Regulation Act 1947, and the Bank Company Act 1991.
In a separate circular issued on the same day, the central bank said payment service providers (PSPs) would be permitted from now on to facilitate the process of bringing foreign income generated by the IT sector into the country.
According to the central bank, this new provision will enable PSPs to streamline the process of bringing IT sector earnings into Bangladesh.
Previously, such income could only be repatriated through banking channels and mobile financial service (MFS) providers.
The move in the circular, issued by the Foreign Exchange Policy Department, aims to expand the options available for repatriating foreign income and promote ease of doing business in the IT sector.
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