Bangladesh Bank has issued a unified circular bringing existing directives on foreign exchange transactions and management under a single framework.
As a result, banks have received updated guidance for managing activities such as foreign exchange rate determination, Authorized Dealer (AD) bank transactions, and import trade risk management.
Issued on Thursday (October 29), the circular consolidates various foreign exchange regulations and directives published over time.
The central bank issued the directive under the powers conferred by Section 20(3) of the Foreign Exchange Regulation Act, 1947.
Under the new circular, previous directives in Volume I of the "Guidelines for Foreign Exchange Transactions-2018" along with subsequent related circulars have been superseded.
However, instructions regarding monthly report submissions specified in Volume II of the guidelines will remain in effect.
The unified circular outlines rules for foreign exchange rate determination and reporting, as well as transaction procedures between Bangladesh Bank and Authorized Dealer banks.
It also incorporates directives regarding payments and settlements through the Asian Clearing Union (ACU), foreign currency account operations, and banks' open position limits.
Additionally, the circular includes provisions for Nostro account reconciliation, forward and swap transactions, and hedging mechanisms to mitigate import commodity price volatility risks.
It also explicitly reiterates the prohibition on exchanging, transferring, and transacting virtual assets and virtual currencies.
The circular will remain valid for one year from the date of issuance. Any new directives issued during this period must be followed in alignment with the unified circular.
Industry insiders noted that banks previously had to navigate multiple documents to comply with separate circulars issued at different times.
Consolidating these directives into a single framework makes it easier to locate and implement rules, fostering greater compliance and coordination among banks and financial institutions handling foreign exchange transactions.
