Dhaka, Bangladesh (BBN)– Bangladesh Bank (BB) should increase net open position (NOP) limits of commercial banks to develop the country’s foreign exchange market, former Governor of the central bank Salehuddin Ahmed has said.

“The central bank may raise the NOP limit slightly over the board. But the NOP of banks, which are major players in the market, will be increased considering bank to bank basis performances,” the former BB chief said while speaking at a seminar on Saturday.

The Citibank NA Bangladesh organized the seminar on ‘foreign exchange and rates risk management in a changing global macro scenario’ held at a city hotel.

The central bank of Bangladesh re-fixed the NOP limit of the banks to US$517 million on September 13 last year from previous $432 million.

The NOP has been determined on the basis of 15 per cent of the total capital of the banks as on December 31, 2008, a BB official confirmed.

The former central bank chief also advised the government for taking effective measures to update the Foreign Exchange Regulation Act (FERA), 1947 immediately.

Currently, a nine-member committee is working to prepare the draft of the act, which will be submitted to the finance ministry by the end of this calendar year, a committee member told the FE.

Some neighboring countries including India, Pakistan and Sri Lanka have already amended their foreign exchange rules and regulations in line with the international practices.

Citi Country Officer, Bangladesh, Mamun Rashid said all major economies have taken corrective measures to come out of the global financial meltdown.

He also said the Citi will remain in forefront for providing foreign exchange solutions to their clients.

Samit Ghosh, Citi Global Markets Director for South Asia made two presentations on the recent development in the global currency regime and hedging solutions at the seminar.

Among others, Acting Head of Global Markets, Citi Bangladesh Shams Zaman and Acting Head of Corporate Bank, Citi Bangladesh, Kanti Kumar also spoke on the occasion.

BBN/SSR/AD-31Oct10-10:01 am (BST)