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In an effort to increase liquidity in the forex market, the Bangladesh Bank (BB) has reduced the US dollar-retention limit for exporters who maintain foreign-currency accounts with proceeds from shipments.
"It has been decided to reinstate the retention limit out of realised export proceeds of ERQ to 7.5 per cent, 30 per cent and 35 per cent from 15 per cent, 60 per cent and 70 per cent respectively," said a BB circular issued by the Foreign Exchange Policy Department (FEPD) Sunday.
People familiar with the matter told the FE that the market liquidity will go up if the exporters encash as per the new instructions.
Traders are permitted to retain a portion of their earnings in the export retention quota (ERQ) accounts to settle back-to-back letters of credit (LC) liabilities.
In another circular, the central bank has established a limit for forward premiums in the foreign exchange market.
This measure is intended to maintain orderly discipline in the foreign exchange market, said a BB official.
"It has been decided that authorised dealers may apply forward premium not exceeding SMART + 5 per cent per annum with declared spot rates for forward dealings with customers and relevant counterparties."
The circular also specified that other instructions for forward transactions will remain unchanged.
jasimharoon@yahoo.com