The Bangladesh Bank has received about $1.48 billion from banks under its currency swap arrangement which began on February 15.

Currency swap is an agreement between two parties (in this case, the Bangladesh Bank and the commercial banks) to exchange a specified amount of one currency for another currency at an agreed-upon exchange rate on a specified date.

Deposits of dollars under currency swap dropped to the current level from $1.75 billion in March 24 as some banks reclaimed dollars to meet high greenback demands on the market.

Therefore, the country’s foreign exchange reserves, according to the International Monetary Fund’s BPM6, dropped to $19.8 billion on April 17 from $20.78 billion in February, BB officials said.

The net foreign reserve dropped below $15 billion.

The banks received about Tk 16,380 crore in total by depositing $1.48 billion, mostly for a thirty-day tenure.

On February 15, the BB approved currency swap arrangement between the central bank and the commercial banks.

With the new swap arrangement, commercial banks allowed exchange the taka for the dollar, or vice versa, with the Bangladesh Bank.

They can reclaim their respective dollar amounts after repaying the taka to the central bank and settling the interest rates with the BB.

The central bank said that under this arrangement, a minimum of $5 million or its equivalent in takas could be swapped.

The swap will be for a minimum of seven to a maximum of 90 days.

According to the circular, if the commercial banks have surplus dollars, they can deposit them in the Bangladesh Bank and receive the equivalent amount in the taka.

Likewise, they can deposit takas in the central bank and receive the equivalent amount in dollars or other approved foreign currencies, the circular said.

To avail the currency swap facility, interested banks will have to enter into an agreement with the central bank.

According to that agreement, on the day when commercial banks deposit dollars in the Bangladesh Bank, they will receive the equivalent amount in the taka based on the exchange rate of the dollar on the day.

Similarly, after a specified period, they will be able to deposit takas and receive the equivalent amount in dollars, with paying or receiving an interest margin.

However, for Sharia-based banks, there would be no interest margin.