BB sets new rules to fix future USD prices
Staff Reporter :
Bangladesh Bank has introduced new rules for banks to determinethe forward selling and buying rate (Future rate) of the dollar with a fixed maximum rate set.
As per the new regulations, banks can fix the rate of forward dollar by adding the maximum six months moving average rate of treasury bill (SMART) + 5 per cent per year to the current dollar rate.
Bangladesh Bank discloses this Six Months Moving Average Rate of Treasury Bill at the beginning of every month.
The SMART rate was 7.10 per cent in July, increased to 7.14 per cent in August, and remained unchanged in September.
If one books dollars for the future now, they will have to pay Tk 123.35 per dollar after one year.
If the pricing is done on a monthly basis, the cost will decrease each month. Currently, the dollar price for imports stands at Tk 110.
Prior to the new guidelines, there were no rules on how banks would determine the value of the dollar in such cases. Until now, each bank used to determine the forward dollar selling and buying rate in a separate process.
A senior official of the central bank told the journalists that by fixing the forward selling and purchasing rates of foreign currency, a consumer’s exchange rate risk is decreased.
The process of currently fixing the dollar price to be paid or received in the future is called forward dollar selling and buying.
Future prices can be established for both buying and selling dollars. An importer can purchase dollars now and import goods within a year, necessitating an additional commission to the bank based on the prevailing dollar prices.
Even if the price falls during that period, the importer must pay the agreed current price. However, if the price increases again, they will reap the benefits, meaning they won’t have to pay extra.
Exporters can also sell dollars at specific times. In this scenario, if the price falls, the exporter may incur losses.
Meanwhile, Commercial banks witnessed a drop in foreign currencies last month from that in the preceding month mainly due to a sharp fall year-on-year in the inflow of remittance and a relatively small growth in export earnings.
The gross foreign currency balance with the banks stood at $5.80 billion in August, down from $5.90 billion in July, as per the latest data of Bangladesh Bank.
