BANK OF THE REPUBLIC OF BURUNDI

THE DIRECTORATE

CIRCULAR NO. 001/2023 ON OPERATING MODALITIES OF THE INTERBANK FOREIGN EXCHANGE MARKET (MID) ISSUED UNDER REGULATION NO. 002/2023 RELATIVE TO THE INTERBANK FOREIGN EXCHANGE MARKET

The Bank of the Republic of Burundi,

Having regard to Law No. 1/34 of December 2, 2008 establishing the Statutes of the Bank of the Republic of Burundi in Articles 17 and 18;

Having regard to Law No. 1/17 of August 22, 2017 governing banking activities;

Having regard to Law No. 1/07 of May 11, 2018 establishing the National Payment System;

Having regard to Regulation No. 002/2023 on the Interbank Foreign Exchange Market;

Has issued:

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Article 1: Object and Scope

This circular aims to determine the operating conditions of the MID. It applies to commercial banks.

Article 2: Foreign Exchange Requirement

Commercial banks are required to conduct all foreign exchange transactions on the MID at freely negotiated rates, for themselves and/or on behalf of their clients.

Non-bank participants may request quotations from the MID through their respective commercial banks.

Article 3: Market Opening and Closing

The MID operates on all business days from 9:00 a.m. and closes no later than 4:00 p.m.

Article 4: Communication of Foreign Exchange Buy or Sell Offers

The amounts of foreign exchange buy or sell offers expressed by a commercial bank must be communicated through the secure information exchange channel established for this purpose by the BRB.

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Article 5: Foreign Exchange Sale Obligation

Any commercial bank with a net global foreign exchange long position exceeding the 25% limit of its core capital, determined at the close of the current day, is required to sell the excess on the MID on the following business day.

Article 6: Foreign Exchange Purchase Obligation

Any commercial bank with a net global foreign exchange short position exceeding the 25% limit of its core capital, determined at the close of the current day, is required to purchase foreign exchange on the MID on the following business day to cover the deficit.

Article 7: Communication of Rates and Transaction Amounts

The BRB publishes the indicative rate between 1:00 p.m. and 2:00 p.m. for all transactions conducted on the MID.

The BRB publishes at 4:30 p.m. the weighted average closing rate of MID transactions for the day.

The BRB provides no indication regarding the formation of rates, which are freely negotiated between commercial banks themselves and their clients.

Article 8: Cases of BRB Intervention

The Bank of the Republic of Burundi may intervene in the MID by selling or purchasing foreign exchange, particularly if the indicative MID rate, published between 1:00 p.m. and 2:00 p.m., deviates by more than two percent from the previous day's MID closing rate.

Article 9: Adjudication Principle in Case of BRB Intervention

In the event of its intervention, the BRB follows the following adjudication principles:

1. All MID participants are eligible for adjudication;
2. The selection of offers/demands is made solely based on the proposed rates:
   i. Foreign exchange offers are ranked by rate and allocated starting from the lowest rate up to exhausting the amount to be purchased;
   ii. Foreign exchange demands are ranked by rate and allocated starting from the highest rate down to exhausting the amount to be sold.

Article 10: Entry into Force

This circular enters into force on the day of its publication on the BRB website and in the Official Gazette of Burundi.

Made in Bujumbura, on 26/04/2023

Dieudonné MURENGERANTWARI
Governor.