Cenbank fixes forward forex rate
The process of currently fixing the dollar price to be paid or received in the future is called forward dollar selling and buying.
The central bank fixed the forward foreign currency selling and buying rate on Sunday.
From now on, banks can fix the rate of forward dollar by adding the maximum six months moving average rate of treasury bill (SMART) + 5% per year to the current dollar rate.
At present, the SMART rate is 7.14%. Banks can charge a maximum of 12.14% additional with the present dollar rate in case of forward dollar purchase and sell.
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A senior official of the central bank told The Business Standard, 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.
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.
Giving an example of the matter, the head of treasury department of a private bank told TBS that in case of deferred LC of import, a customer has to pay the price of his imported goods after six months to 1 year.
Now the customer has to be uncertain about what the price of the dollar will be after that time. This is because the customer determines the selling price of his imported product by taking into account the dollar value at the time of payment.
The rate at which the customer will buy dollars after six months or 1 year is determined in advance by the forward dollar buying rate. Similarly, the forward dollar buying rate predetermines how much an exporter will get after the dollar of his export proceeds arrives after six months.
On Sunday, the buying rate of the dollar was Tk110 and the selling rate was Tk109.50 at consumer level. Banks can now charge a maximum rate of Tk123.35 for a one-year forward dollar purchase and Tk122.73 for a one-year forward dollar sale. However, if the deadline is reduced, the price of the dollar will also decrease.
