Regulatory Alerts2026-07-02
Added · Updated
Forward Rate Agreements to hedge interest rate risk against imports under suppliers’/buyers’ credit
Bangladesh Bank's Foreign Exchange Policy Department-1 (FEPD-1) has authorized Authorized Dealers (ADs) to enter into Forward Rate Agreements (FRAs) with importers to hedge interest rate risk on foreign currency suppliers'/buyers' credit for usance imports. These FRAs must be used strictly for hedging, with ADs required to fully offset their exposures on a back-to-back basis, ensuring their pricing spread does not exceed 10 basis points. ADs must adhere to comprehensive documentation, daily mark-to-market valuations, internal audit reviews, Board-approved policies, and submit weekly and monthly reports on all FRA transactions to Bangladesh Bank.
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