Offer foreign currency swap facility to ease exporters' urgent cash needs: BB directs banks
Under this system, exporters can temporarily swap their foreign currency holdings with banks and receive an equivalent amount in taka, which must be settled within 30 days
The Foreign Exchange Policy Department of Bangladesh Bank has issued a directive instructing all commercial banks to introduce a foreign currency–Taka swap facility allowing exporters to temporarily exchange foreign currency from their Exporters' Retention Quota (ERQ) accounts for local currency to meet urgent cash needs.
In a circular released today (3 November), the central bank outlined the operational guidelines for the new swap mechanism, which will allow exporters to obtain taka against their retained foreign currency earnings—such as US dollars or euros—without converting them.
30-day settlement period
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It has been decided that Authorised Dealers (ADs) may enter foreign currency–Taka swap arrangements with exporters against balances held in their respective 30-day pools and ERQ accounts. According to the circular, the maximum tenor of the swap will be 30 days for 30-day pools.
The swap rate, or "swap point," will be determined based on the difference in interest or profit rates between the two currencies (taka and foreign currency).
Not a loan, but a temporary exchange
Bangladesh Bank clarified that this swap is not a loan or financing tool, but rather a temporary exchange agreement. Banks must ensure proper risk management, liquidity control, and internal audit processes while conducting such transactions.
Exporters will also be required to formally acknowledge that they understand the contract terms, exchange rate implications, and associated risks before entering into the agreement.
Funds must be used for export operations only
The central bank stressed that taka obtained through this swap may only be used for export-related business purposes—such as production costs, transportation, or raw material purchases. The funds cannot be used for any speculative transactions.
A boost for exporters' cash flow
Officials at Bangladesh Bank believe the new swap facility will allow exporters to enhance cash flow without premature conversion of export proceeds, thereby reducing pressure on the dollar market. It will also help exporters maximise the use of their export earnings more efficiently.
All swap transactions must be properly documented, recorded in terms with international best practices, and reported to Bangladesh Bank as per routine procedures, reads the circular.
