Banks urged to quote exchange rates thru' treasury dept
Friday, 20 July 2007
FE Report
The Bangladesh Foreign Exchange Dealers' Association (BAFEDA) has decided to issue a letter to its member banks for communicating the foreign currency exchange rates to the overseas exchange houses to ensure discipline in the market.
The technical committee of the foreign exchange dealers' apex body took the decision at a meeting held in its office in Dhaka Wednesday with its Chairman Bashar M Tareq in the chair.
"We have taken such a decision to maintain stability in the inter-bank foreign exchange market as well as orderly movement of the exchange rates," a member of the committee told the FE Thursday.
He also said the committee will submit a report in this connection to the executive committee of the BAFEDA for their consideration.
The BAFEDA will issue the letter to the chief executives of the commercial banks for taking necessary steps after being approved by the executive committee, he added.
Sources, however, said some banks are quoting exchange rates to overseas exchange houses prepared by their departments rather than using treasury one. But bank departments, other than the treasury, are neither equipped nor empowered to quote such rates.
This practice has been causing price anomaly among banks as well as in the inter-bank foreign exchange market, the sources observed.
"Any bank can not quote 'off market rates' in line with the central bank's core risk management guideline," another member of the technical committee said.
He also said the meeting also decided to request the banks to quote exchange rates through the treasury department, which is authorised body to determine and quote rates.
"While quoting, dealers should bear in mind the concept of rate appropriateness," the member added.
The Bangladesh Foreign Exchange Dealers' Association (BAFEDA) has decided to issue a letter to its member banks for communicating the foreign currency exchange rates to the overseas exchange houses to ensure discipline in the market.
The technical committee of the foreign exchange dealers' apex body took the decision at a meeting held in its office in Dhaka Wednesday with its Chairman Bashar M Tareq in the chair.
"We have taken such a decision to maintain stability in the inter-bank foreign exchange market as well as orderly movement of the exchange rates," a member of the committee told the FE Thursday.
He also said the committee will submit a report in this connection to the executive committee of the BAFEDA for their consideration.
The BAFEDA will issue the letter to the chief executives of the commercial banks for taking necessary steps after being approved by the executive committee, he added.
Sources, however, said some banks are quoting exchange rates to overseas exchange houses prepared by their departments rather than using treasury one. But bank departments, other than the treasury, are neither equipped nor empowered to quote such rates.
This practice has been causing price anomaly among banks as well as in the inter-bank foreign exchange market, the sources observed.
"Any bank can not quote 'off market rates' in line with the central bank's core risk management guideline," another member of the technical committee said.
He also said the meeting also decided to request the banks to quote exchange rates through the treasury department, which is authorised body to determine and quote rates.
"While quoting, dealers should bear in mind the concept of rate appropriateness," the member added.