For the first time, Bangladesh Bank introduced currency exchange or swap system. As a result, if the commercial banks have surplus dollars, they can borrow the same amount by depositing it in Bangladesh Bank. Both Bangladesh Bank and commercial banks will benefit from this.
On Thursday (February 15), the central bank issued a notification in this regard.
Bangladesh Bank says that this system of taka-dollar swap has been introduced for a minimum of seven to a maximum of 90 days. Banks will receive immediate cash against surplus dollars. Again, by returning the money after the specified time, the commercial banks will get an equivalent amount of dollars from Bangladesh Bank.
Through this, according to the dollar price in the interbank currency market, Bangladesh will be able to lend money to banks with dollars. Currently, the selling rate of one dollar in the interbank currency market (spot rate) is 110 taka.
Meanwhile, when the banks take their dollars back, they have to pay interest on the money. In this case the interest will be the difference between the Sofar rate and the Repo rate.
At present the SOFOR (Secured Overnight Financing Rate) interest rate is 5.3 percent, and the repo rate is 8 percent. Here the difference is 2.7 percent. Banks have to pay interest at this rate annually for currency swap.
Currently, banks borrow money from the central bank at an annual interest rate of 8 percent. But they will pay interest at the rate of 2.7 percent per annum on currency swaps.
It is known that currently commercial banks exchange dollars and money between each other for their own needs. Now the facility of swap with the central bank has started. This new provision has been introduced under currency management. Excess dollars currently held by commercial banks can be sold to the central bank or other banks. However, there is no guarantee that those dollars will be returned when needed. But the swap system has that guarantee.
Those concerned say that a minimum of 5 million dollars or its equivalent can be exchanged under this system. To take advantage of this, the central bank will have an agreement with the interested banks. According to that agreement, the day commercial banks deposit dollars in Bangladesh Bank, they will get an equivalent amount of money as the dollar exchange rate of that day. Similarly, they also said that they can withdraw the dollar by depositing the money after the specified time.
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