Daily spot reference to determine dollar-taka exchange rates

Daily twice-set spot-reference rate will now determine dollar-taka
exchange under a new foreign-exchange regime as the New Year bids farewell to the inefficacious crawling-peg system.
The central bank rolled out Tuesday a more flexible exchange-management regime styled Bangladesh Foreign Exchange Market Spot Reference Exchange Rate (RR) in its latest bid to bring stability in the overheated foreign-exchange market.
Issuing a circular on the last day of 2024, Bangladesh Bank's foreign-exchange policy department (FEPD) said, "The new system will come into force completely from January 12, 2025 from when the banking regulator will start publishing the RR on its website twice a day-at 12:30pm and at 6:00pm."
But the authorised dealer (AD) banks will start reporting their foreign currencies buy-sale transaction-related information through a template prescribed by the central bank's FRTMD or forex reserve and treasury management department from January 05, sources at the BB said.
Reference rate or RR is a transactions-based weighted average rate that comprises forex spot transactions that are settled at or above USD100,000. The volumes traded at the respective prices will be used to calculate the weights in compiling the average, BB officials said.
The circular reads: "The authorised dealers shall, before 11:30 am, report for transactions executed till 11:00am. In the afternoon, they shall provide information of transactions executed from 11:00am to 5:00pm before 5:30pm."
From January 12 onwards, BB will publish daily benchmark reference rate, defined as the weighted average of freely quoted exchange rates in market transactions with customers and other dealers.
According to the guidelines to facilitate the benchmark reference exchange rate, the RR is designed to provide reference foreign-exchange rates for underlying market conditions for trading foreign exchange in Bangladesh.
The firman says the BB will periodically review the market turnover, market concentration and trade-distribution metrics to develop additional measures, "as needed, to ensure that RR remains a reliable reference foreign-exchange rate".
The newly introduced RR will be published daily by the Bangladesh Bank on its website as the main source of publication. All local and international media agencies should refer to the website to retrieve information on forex spot trading in Bangladesh once published.
As designed, RR will be published twice daily - at 12:30pm on each business day, and at 6:00pm on each business day. Where a reference exchange rate is required on a non-business day, the latest published information for RR on the immediately preceding business day may be used.

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