Regulatory Alerts2025-02-02
Added
FEPD Circular Letter No. 05: Forward sale and purchase in foreign exchange
Authorized Dealers in Bangladesh must apply a uniform calculation method for forward exchange rates to address observed variations in practice. The circular specifies that the forward selling rate is determined by adjusting the spot selling rate with a forward premium calculated using the differential between the T-Bill rate and the benchmark rate in foreign currency over the tenor in days. For forward buying rates, Authorized Dealers shall calculate the desired rate by adjusting the spot buying rate with the forward premium.
Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka www.bb.org.bd FE Circular Letter No. 05 Date: February 02, 2025 Head offices/principal offices of all Authorized Dealers in Bangladesh Dear Sirs, Forward sale and purchase in foreign exchange Please refer to FE Circular No. 09 of January 26, 2025 regarding application of forward premium to determine forward exchange rate in foreign currency. 02. It has been observed that Authorized Dealers (ADs) are using different techniques to calculate forward exchange rates. To bring uniformity, a calculation of forward selling exchange rate is presented in the below table containing determination of forward premium: Spot selling rate Tenor in Days T-Bill rate Benchmark rate in FC Differential Forward Premium Forward Rate (a) (b) (c) (d) (e)= (c) - (d) (f) = (a)(e)(b)/360 (g)= (a)+(f) 03. With regard to forward buying rate, ADs shall consider spot buying rate to calculate the desired rate on adjustment of forward premium. ADs are advised to observe the above procedure meticulously. Yours faithfully,
(Monoar Uddin Ahmed) Director (FEPD) Phone: 9530119