The central bank officials briefed a group of managers in Dhaka on how they can utilise the forward trade facility without minimum risk citing several examples and making in depth presentation, sources said.

In a bid to ease pressure on foreign exchange, the central bank last week relaxed its regulations relating to forward trade so that the fund managers can trade foreign exchange beyond their limits.

The new regulation allowed swap deals on the basis of counter-party limit instead of net open position of foreign exchange. The counter-party limit will be fixed in line with the existing core-risk management guidelines, sources added.

The BB also increased cash reserve ratio (CRR) by half a percent to reach at 4.5 percent at the end of February for commercial banks that became effective from March 1. It is expected that the measure will help check the rising demand for greenback and discourage bank to avoid more lending.

According to the sources, the central bank prefers to inject greenback in the market cautiously and is not willing to take the foreign exchange reserves below three billion mark, having taken different measures to maintain the level.

The BB will have to pay about $300 million to Asian Clearing Union (ACU) next week and the foreign exchange reserve was $3195 million as on March 2, 2005.

Dollar price in the inter-bank foreign exchange market was Tk63.85 yesterday while the rate at the customers' end was Tk64.

The real effective exchange rate (REER) showed a depreciation trend at the end of the second quarter of current financial year, according to Bangladesh Bank's latest quarterly report.

The BB paid around US$ 300 million to ACU in January. The amount was higher than the normal trend as opening of letters of credit (L/Cs) has gone up substantially in the recent months.

According to central bank statistics, imports rose by 26 .65 percent in the first six months of the current fiscal year. Opening of L/Cs in the first half of this fiscal grew by 24.7 percent, which was 15.36 percent during the same period of the last financial year.

Import of food grain including rice and wheat went up sharply in the recent months, pushing demand for dollar up. Import of capital machinery and scrap vessels also rose heavily in the first half of the current fiscal year.

Remittance flow and export did not grow in the first half of the current financial year at the level the import grew during the period, which resulted in an imbalance, said a top official of BB.