ACU set to add JPY to currency basket

Dhaka,  Wed,  23 August 2017
Published : 12 Jul 2017, 00:46:45

ACU set to add JPY to currency basket

Siddique Islam

Japanese yen (JPY) is set to be included in the basket of Asian Clearing Union (ACU), aiming to boost business activities among its member countries through facilitating the payment system.

The ACU technical committee has recommended inclusion of the third currency for settlement of payments, according to officials. Currently, the US dollar and Euro are being used for payment among the nine-member countries.

The union would take a final decision in this connection at its 46th board meeting scheduled to be held in Colombo, Sri Lanka on July 12-13, they added.

"The transaction rules and procedures will be amended if the board accepts such recommendation," a senior official of Bangladesh Bank (BB) told the FE.

A three-member Bangladesh delegation, headed by the central bank Governor Fazle Kabir, will participate in the board meeting.

Earlier in April this year, the ACU technical committee had taken a decision in this connection at a meeting held in Nay Pyi Taw, the administrative capital of Myanmar, according to the central banker.

He also said Iran had proposed to include the JPY along with the US currency and Euro in the ACU currency basket for making the payment settlement easier.

"Jute export from Bangladesh to Iran will increase if the currency basket includes JPY as a third currency in the settlement mechanism," the central banker said, explaining the potential benefit of Bangladesh due to inclusion of the new currency.

Direct transactions between Bangladesh and Iran now put on hold mainly due to a US sanction on the western Asian country.

Currently, Bangladeshi banks cannot establish corresponding banking directly with the Islamic republic due to the US sanction.

The ACU board of directors has established a technical committee to provide independent advice, assistance, and recommendations to the board, aiming at improving and well-functioning of the ACU mechanism.

The committee's proposals should be presented to the board in writing for their review and approval, according to the existing provisions of the union.

The ACU is an arrangement among Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives through which intra-regional transactions among the participating central banks are settled on a multilateral basis.

In the last week, Bangladesh made a routine payment of US$1.02 billion to the ACU against imports during the May-June period of the current calendar year.

Under the existing provisions, outstanding import bills and interests thereof are to be paid at the end of every two months among the member countries.

The amount of such payment came down to $1.02 billion in the latest installment from $1.12 billion earlier mainly due to lower imports from the ACU member countries, another BB official said.

The central banker also said Bangladesh imported different consumer items, cotton, raw materials and capital machinery from the ACU member countries, particularly from India.

The union started its operation in November 1975 to boost trade among the member countries.

Bangladesh and Myanmar joined the union as the sixth and seventh members in 1976 and 1977 respectively.

Bhutan joined the ACU in December 1999 and the Maldives in January 2010.
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