Fashion
Bangladesh Bank allows foreign currency-taka swap facility for dealers
The decision aims at facilitating short-term liquidity requirement in taka of exporters while simultaneously permitting them to maintain their foreign currency holdings, a circular from the central bank said.
Bangladesh Bank has introduced a financial arrangement allowing authorised dealers to enter into foreign currency-taka swap arrangements with exporters against balances held in their respective 30-day pools and exporters’ retention quota accounts.
The aim is to facilitate short-term liquidity requirement in taka of exporters while simultaneously permitting them to maintain their foreign currency holdings.
The swap tenor must not exceed the expected utilisation period for ERQ balances, and is limited to a maximum of 30 days for 30-day pools. The facility against such swap is to be settled on maturity.
The applicable swap points will be based on market- or cost-reflective interest rate or profit differential between two currencies.
Swaps shall be executed only against available and unencumbered balances held in foreign currency owned by exporters. ADs shall maintain adequate risk management, credit and liquidity control systems, along with internal approval and audit mechanisms, according to domestic media reports.
The swap transaction shall not be treated as loan or financing facility extended to customers by ADs.
Taka funds obtained by exporters under the swap arrangement shall be used solely for bonafide working capital purposes related to export operations; no speculative positions shall be undertaken under this arrangement.
Fibre2Fashion News Desk (DS)