Dhaka, Bangladesh (BBN)- The central bank has introduced a new calculation method of daily foreign exchange position for the commercial banks considering the regional as well as global calculation practices.

“We’ve introduced the new calculation system of daily foreign exchange position for the banks in line with Basel-II framework,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in the capital, Dhaka on Wednesday.

Under the new calculation system, total of over bought among the foreign exchanges and total of over sold among the currencies which ever is higher shall be treated as exchange position of the day for the banks concerned.

Currently, the banks are fixing their daily exchange positions by netting of the over bought and over sold among the foreign currencies.

“The new calculation system will finally come into effect from February 1, 2010,” the BB official said, adding that the banks will be allowed to report on daily exchange position maintaining both new and existing calculation formulas from January 10-31 in the next year.

The central bank issued a circular in this connection Wednesday and asked the commercial banks to follow the new calculation system of daily exchange position properly.

In South Asia India, Pakistan and Sri Lanka have already adopted the daily foreign exchange position calculation method in line with the Basel-II accord.

“Banks shall maintain their overall exposures in foreign currencies (overall net exchange position) within the open position limit at the end of the day,” the BB said in its circular.

The open position limit is required to be approved by the central bank on the basis of total capital and some other qualitative judgments, according to the circular.

In September this year, the BB has increased the net open position (NOP) limits of commercial banks for holding foreign exchange in order to keep the inter-bank foreign exchange market stable.

The central bank re-fixed the NOP limit of 45 commercial banks out of 48 to US$517 million on September 13 last from $432 million earlier, officials said.

The NOP limit of two state-owned banks and one private commercial bank were not increased due to their negative capital status, the BB officials confirmed.

BBN/SS/SI/AD-30December09-11:46 pm (BST)