01 Management of Exchange Rate Risk and Mandatory Reserves

Bank of the Republic of Haiti

CIRCULAR # 01

LETTER-CIRCULAR
TO COMMERCIAL BANKS AND
SAVINGS AND HOUSING BANKS

Pursuant to paragraph 5 of Article 43 of the Decree of November 14, 1980, regulating the operation of banks and banking activities on the territory of the Republic of Haiti, banking establishments must comply with the provisions of this letter-circular regarding the management of exchange rate risk and mandatory reserves.

1.- Exchange Position

Effective February 15, 2008, the structural exchange position as defined in Circular # 81-4 on exchange rate risk is set at a maximum of 1% relative to accounting equity.

At the end of each day, any banking establishment reporting a long position exceeding 1% of its accounting equity is required to unwind this position. If this excess position is not unwound, it will be sold to the BRH (Bank of the Republic of Haiti) on the next business day at the banking reference rate. The banking reference rate is the weighted average of the dollar acquisition rates by banks on the previous day.

This 1% cap replaces, until further notice, the maximum limit of 8% provided for in Circular # 81-4.

2.- Establishment of Mandatory Reserves on Liabilities Denominated in Foreign Currencies

Effective February 1, 2008, the method for establishing mandatory reserves on liabilities denominated in foreign currencies, as defined by Circular # 86-5 of May 13, 1997, is established according to the following schedule:

.../...

P.O. Box 1570, Port-au-Prince, Haiti. Telephone: (509) 299-1243 / Fax: (509) 299-1095

a) From February 1 to February 15, 2008

• 30% in national currency
• 70% in foreign currencies

b) From February 16, 2008 onwards:

• 32.5% in national currency
• 67.5% in foreign currencies

Port-au-Prince, January 25, 2008

(Signature)
Charles Castel

P.O. Box 1570, Port-au-Prince, Haiti. Telephone: (509) 299-1243 / Fax: (509) 299-1095

Bank of the Republic of Haiti

TO COMMERCIAL BANKS AND
SAVINGS AND HOUSING BANKS

The second paragraph of point 1 of the letter-circular dated January 25, 2008 reads as follows:

"At the end of each day, any banking establishment reporting a long position exceeding 1% of its accounting equity is required to unwind this position. If this excess position is not unwound, it will be sold to the BRH on the next business day at the banking reference rate. The banking reference rate is the weighted average of the dollar acquisition rates by banks on the previous day."

Instead of:

"At the end of each day, any banking establishment reporting a long trading position is required to unwind this position. If this long trading position is not unwound, it will be sold to the BRH on the next business day at the banking reference rate. The banking reference rate is the weighted average of the dollar acquisition rates by banks on the previous day."

Please see: New wording of the circular canceling and replacing the initial wording.

Port-au Prince, January 25, 2008

(Signature)
Charles Castel

P.O. Box 1570, Port-au-Prince, Haiti. Telephone: (509) 299-1243 / Fax: (509) 299-1095