Most of the banks are showing interest in forward transactions instead of spot deals to ensure their maximum exchange gains, according to market operators.
All the authorised dealer (AD) banks are allowed for forward deal-making with their clients for a maximum of 90 days.
"The banks are getting encouraged gradually in forward transactions to make the most in profit from the deals," a senior treasury official of a leading private commercial bank (PCB) told the Financial Express (FE) while explaining the possible impact of the new exchange-rate regime.
The banks prefer to fix tenure for the forward deals in line with the customers' requirements, he said, adding that in the near future, a fresh volatility may creep in the market if the higher volumes of forward transactions continue.
A forward transaction is a binding agreement between two parties to exchange an asset at a predetermined price and date in the future. Forward transactions are also known as forward contracts.
On the other hand, a foreign-exchange spot transaction, also known as FX spot, is an agreement between two parties to buy one currency against selling another at an agreed price for settlement on the spot date. The exchange rate at which the transaction is done is called spot exchange rate.
Inter-bank transactions may also fall in the coming days as similar rates offered by all the banks, they explained.
Under the new forex rules, each AD shall apply spot rate uniformly irrespective of the size for all buying transactions of a working day. Similarly, uniform spot rate shall also be maintained for all selling transactions of a business day.
"The instructions should be amended excluding interbank transactions from the provisions that will facilitate such deals on the foreign- exchange (forex) market," says a market player.
Besides, discipline for procuring inward remittances should be ensured which will help increase interbank transactions, he adds.
Meanwhile, the Bangladesh Bank (BB) has verbally increased the mid-rate of crawling peg to Tk 119 instead of Tk 117 earlier.
Actually, the maximum exchange rate of the local currency against the greenback has been fixed at nearly Tk 122 after adding the 2.5-percent band of the crawling peg.
A crawling peg is a system of exchange-rate adjustments in which a currency with a fixed exchange rate is allowed to fluctuate within a band of rates.
Earlier on August 18 last calendar year, the central bank increased the band of the crawling peg, which allows fluctuations of the exchange rate within a predefined range, to 2.5 per cent instead of 1.0 per cent earlier aiming to increase the flow of foreign exchange in the market.
However, all the AD banks have started sending information on four types of foreign-exchange transactions to the central bank through using a template in line with the new exchange-management regime.
The forex transactions include export-proceeds encashment and commercial remittance, deal details with exchange houses or aggregators for inward remittance, spot foreign currency (FC) selling covering all deals including letter of credit (LC), service payments, debt service, outbound remittance and inter-bank forex transactions.
The central bank will prepare and publish a daily reference benchmark- exchange rate on the basis of the forex transactions report provided by all AD banks, according to the central bank officials.
"We'll calculate the daily reference rate considering weighted average rate on the US dollar and Bangladesh Taka (BDT) of the four types of transactions of all 61 AD banks in Bangladesh," a BB senior official told the FE.
The banking regulator will publish the reference twice each working day, according to the BB official.
Effective from January 12, 2025, the central bank will publish a daily reference benchmark-exchange rate, defined as the weighted average of freely quoted exchange rates in market transactions with customers and other dealers, according to a circular issued by the BB on December 31, 2024.
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