The central bank has raised the net open position (NOP) limit for commercial banks to hold foreign exchange as part of a twin-protection to the inter-bank forex market against volatility, officials said.
A depreciation of the US dollar on the inter-bank foreign exchange (forex) market will harm important stakeholders in the economy who earn the foreign exchange, they said.        Â
The other measure is direct purchase of the dollar by the Bangladesh Bank (BB) from the commercial banks.
The NOP limit has been increased by more than 11 per cent to US$1.51 billion from the previous mark of $1.36 billion for all the 56 scheduled banks.
According to the BB officials, the new NOP has been determined on the basis of 15 per cent of the total regulatory capital of the banks, as on March 31, 2015.
"We've increased the limits of NOP of the commercial banks in line with the market demand," a BB senior official told the FE Monday.
The banks are now empowered to retain more foreign exchange that helps in minimising sale pressure of the US dollar on the inter-bank foreign exchange (forex) market, the central banker explained.
"We've already informed the banks about the revised NOP limit and asked them to maintain the new NOP limit for holding foreign exchange," he noted.
Under the revised directives, the NOP limit of ICB Islamic Bank, Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) will remain unchanged while such limit for BASIC Bank Limited and Bangladesh Commerce Bank Limited (BCBL) has been lowered.
The NOP limit for the BASIC Bank came down to US$5.0 million from $8.0 million while BCBL's to around 4.0 million from $6.0 million set earlier.
"We've decreased the NOP limit for two banks due to their lower capital bases," the BB official said.
The NOP for nine new banks has been re-fixed at $8.0 million from $5.0 million in line with their capital position.
The central bank has taken the latest move against the backdrop of increased flow of foreign exchange into the market as well as capital bases of the banks because of lower import-payment obligations in the recent months.
Bankers, however, expressed mixed reactions on BB's latest move. Some said it would help them settle foreign-exchange transactions in a better way but they have to face new challenges relating to risk of foreign-exchange volatility.
"The revised directives will help reduce selling pressure of foreign exchange. But it will increase forex-volatility risk for the banks," a senior treasury official of a private commercial bank told the FE.
On the other hand, the central bank has continued purchasing the US dollar from the commercial banks directly to help keep the forex market stable.
The BB bought US$35 million from four banks Monday, at market rate, to protect the interests of exporters and migrant workers as such market intervention would keep stable the exchange rate of the Bangladesh Taka (BDT) against the US dollar.
"We may continue such intervention in line with the market requirement," another BB official hinted.
The US dollar was quoted at Tk 77.80 on the inter-bank forex market, unchanged from the previous level, market operators said.
A total of $700 million was bought from the commercial banks between July 2 and July 20 of the new fiscal year (FY), 2015-16, for offsetting impacts of its increased supply to the market.
The country's foreign-exchange reserves rose to $25.20 billion Monday from $25.19 billion of the previous day after the latest dollar purchase.
siddique.islam@gmail.com
BB raises NOP limit for banks to maintain stable forex market
Siddique Islam | Published: July 21, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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