02 Management of Exchange Rate Risk and Mandatory Reserves

Bank of the Republic of Haiti

CIRCULAR # 02

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 March 1, 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 accounting equity is required to unwind this position. If this excess position is not closed out, it will be sold to the BRH (Bank of the Republic of Haiti) on the third business day following, at the bank reference rate. The bank reference rate is the weighted average of the acquisition rates for dollars by banks on the day preceding the day on which this excess was reported.

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

The measures regarding the establishment of mandatory reserves on liabilities denominated in foreign currencies, adopted on January 25, 2008, according to Circular # 01, remain and continue to be in force.

Port-au-Prince, February 26, 2008

(Signature)
Charles Castel

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