Notice No. 01/GGBM/2005 of April 29 - Maximum Difference Between Foreign Currency Purchase and Sale Rates (Spread)

NOTICE No. 01/GGBM/2005 SUBJECT: Maximum difference between foreign currency purchase and sale rates (spread)

Within the framework of the modernization of the foreign exchange market in the country, Notice No. 7/GGBM/2004 of December 24 was issued, which approves the Regulations of the Interbank Foreign Exchange Market (MCI).

Operators of this Market subscribed to a Code of Conduct that establishes, among other things, the duty to set a differential (spread) in meticais between the purchase and sale rates of foreign exchange in the operations they conduct with each other.

Thus, given the need to make the foreign exchange market more competitive and to bring to the public the benefit resulting from the practice of harmonizing the Spread in exchange rates, under paragraph 3 of Article 8 of Law No. 3/96 of January 4, the Bank of Mozambique determines:

ARTICLE 1 (Duty to observe the maximum spread of 2%)

1. All entities authorized to conduct foreign exchange business, namely Banks and Exchange Houses, in operations carried out with their clients, must observe a maximum differential (spread) of two percent (2%) between their respective purchase and sale rates.

2. The spread set in accordance with the preceding paragraph must also cover any taxes and commissions charged, when dealing with transactions of foreign banknotes and coins, traveler's checks, and credit cards.

3. To ensure greater transparency, all operators must place the exchange rate table in a visible and easily accessible location for the public.

ARTICLE 2 (Sanctions)

Failure to comply with the provisions of the preceding article constitutes an offense and is punishable under the terms of the Law.

ARTICLE 3 (Clarification of doubts)

Doubts arising from the interpretation and application of this Notice must be submitted to the Banking Supervision Department of the Bank of Mozambique.

ARTICLE 5 (Revocation)

Circular Letter No. 2 of May 7, 1993, from the Foreign Exchange Operations Department, as well as any other provisions that contradict this Notice, are hereby revoked.

Maputo, April 29, 2005

THE GOVERNOR Adriano Afonso Maleiane