Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has introduced US dollar (US$) and Bangladesh Taka (BDT) swap arrangement through offshore banking units (OBUs) of the commercial banks, officials said.

Under the new arrangement, the banks are allowed to swap maximum $20 million from Bangladesh Bank (BB) against their BDT through their OBUs for maximum six months.

 “The central bank wants to meet the growing demand for foreign currency for investment in Bangladesh through offering such facility to the banks,” a BB senior official said, adding that the central bank has already communicated with the banks about introduction of the US$-BDT swap facility.

The banks will receive interest on their invested BDT on the basis of reverse repo rate from Bangladesh Bank, while the banks will have to pay at the London Inter-bank Offered Rate (LIBOR) plus 1.0 per cent interest to the central bank for the US-dollar amount, according to the arrangement.

 “Large foreign currency borrowers including Bangladesh Petroleum Corporation and Biman Bangladesh Airlines may take advantage of the new arrangement through borrowing from local banks,” another BB official noted.

The central bank has taken the latest move against the backdrop of healthy position of the country’s foreign exchange reserve in the recent times.

The country’s forex reserve rose to $16.89 billion Monday from $16.85 billion on the previous working day due mainly to higher growth of export earnings and lower import payment pressure in the recent times, according to the BB officials.

Currently, 31 local and foreign commercial banks conduct OBU operations in Bangladesh.

BBN/SSR/AD-20Nov13-10:44 am (BST)