Foreign Trade
As per Foreign Exchange Regulation Act 1947 (Article 2d) Foreign Exchange means Foreign Currency i,e. Currencies other then Local Currency. It includes any instrument drawn, accepted, made or issued under clause (13) of Article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and any draft, traveller’s cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currency.
Foreign Exchange includes:
Cash Foreign Currency: (Like cash dollar, cash pound sterling, cash riyal etc.)
Instrument in Foreign Currency: (Like FDD, FTT, bill of exchange, promissory Note, L/C, LG etc.)
Deposit in Foreign Currency: (Like deposit in customers, Fc A/C, Bank’s deposit in their Nostro A/C etc.)
Credit in Foreign Currency: (Like loan/ investment made in FC to individual or Farm.)
Islamic Banking System: Two differentiating issues:
Banning/ Prohibition of Interest (Riba)
Observing Principles of Islamic Shariah in all operation. Principles like:
Avoiding Speculation, Gambling, and Uncertainty in all financial transitions.
Asset based, actual and specific Transaction based financing.
Trading of foreign Currency:
It includes mainly dealing room operation excluding the money market operation. This is purchase or sale of one currency in term of another, either Local Currency to Foreign Currency or Foreign Currency to Local Currency or Foreign Currency to another Foreign Currency ( Cross Currency).
All these purchase and sales are permitted by Islamic Shariah and thereby approved by Islamic Banking system subject to observing the guidelines as stated below:
a) Both parties must take possession of the counter values before dispersing, such possession being either actual or constructive.
b) The counter values of the same currency must be of equal amount, even if one of them is in paper money and the other is in coin of the same country, like a note of one pound for a coin of one pound.
c) The contract shall not contain any conditional option or deferment clause regarding the delivery of one or both counter values.
d) The dealing in currencies shall not aim at establishing a monopoly position nor should it entails any evil consequences to the interest of individuals of societies.
e) Currency transaction shall not be carried out on the forward or futures market.
Such trading of foreign currency should not have any speculative motive but to protect the interest of one and to avoid possible loss due to devaluation of the currency conversion of currencies can be done on spot basis.
Foreign Exchange Market: Foreign Exchange is the trading of Currencies. It widely
decentralized 24-hour- a day market . made up of banks and traders communicating electronically.
participants:
Central Bank
Bank
Nonfinancial companies
Non Bank financial institution.
The wholesale or interbank market is the trading between banks
As per Foreign Exchange Regulation Act 1947 (Article 2d) Foreign Exchange means Foreign Currency i,e. Currencies other then Local Currency. It includes any instrument drawn, accepted, made or issued under clause (13) of Article 16 of the Bangladesh Bank Order, 1972, all deposits, credits and balances payable in any foreign currency and any draft, traveller’s cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currency.
Foreign Exchange includes:
Cash Foreign Currency: (Like cash dollar, cash pound sterling, cash riyal etc.)
Instrument in Foreign Currency: (Like FDD, FTT, bill of exchange, promissory Note, L/C, LG etc.)
Deposit in Foreign Currency: (Like deposit in customers, Fc A/C, Bank’s deposit in their Nostro A/C etc.)
Credit in Foreign Currency: (Like loan/ investment made in FC to individual or Farm.)
Islamic Banking System: Two differentiating issues:
Banning/ Prohibition of Interest (Riba)
Observing Principles of Islamic Shariah in all operation. Principles like:
Avoiding Speculation, Gambling, and Uncertainty in all financial transitions.
Asset based, actual and specific Transaction based financing.
Trading of foreign Currency:
It includes mainly dealing room operation excluding the money market operation. This is purchase or sale of one currency in term of another, either Local Currency to Foreign Currency or Foreign Currency to Local Currency or Foreign Currency to another Foreign Currency ( Cross Currency).
All these purchase and sales are permitted by Islamic Shariah and thereby approved by Islamic Banking system subject to observing the guidelines as stated below:
a) Both parties must take possession of the counter values before dispersing, such possession being either actual or constructive.
b) The counter values of the same currency must be of equal amount, even if one of them is in paper money and the other is in coin of the same country, like a note of one pound for a coin of one pound.
c) The contract shall not contain any conditional option or deferment clause regarding the delivery of one or both counter values.
d) The dealing in currencies shall not aim at establishing a monopoly position nor should it entails any evil consequences to the interest of individuals of societies.
e) Currency transaction shall not be carried out on the forward or futures market.
Such trading of foreign currency should not have any speculative motive but to protect the interest of one and to avoid possible loss due to devaluation of the currency conversion of currencies can be done on spot basis.
Foreign Exchange Market: Foreign Exchange is the trading of Currencies. It widely
decentralized 24-hour- a day market . made up of banks and traders communicating electronically.
participants:
Central Bank
Bank
Nonfinancial companies
Non Bank financial institution.
The wholesale or interbank market is the trading between banks
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