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The premium on forward dollar transactions will be applicable only to the forward import payments, Bangladesh Bank said on Tuesday, clarifying its regulations on forward sale and purchase in foreign exchange.
A forward contract is a non-standardised contract between two parties, who enter into an agreement to complete a transaction sometime in the future. The two parties agree today to buy (sell) an asset at a specific date in the future at a specific price.
Banks are usually involved with such business and mostly for import payments.
The clarification also mentions that such forward payments should be applicable for a period not exceeding three months.
Earlier on Sunday, the central bank issued a circular on forward dollar sale premiums. It said ADs may apply forward premium not exceeding SMART+5 percent per annum with declared spot rates for forward dealing.
However, the BB on Tuesday said that for early settlement of forward contracts, the premium needs to be adjusted for actual tenure.
It means that if any contract signed for three months but settled within two months, the premiums to be paid for two months, not three months. Actually, the premium to be calculated on annualized basis.
jasimharoon@yahoo.com