Emerging Markets Currency Guide 2023

Currencies
Global
January 2023
By: Global FX Research www.research.hsbc.com
Emerging Markets
Currency Guide 2023
An essential companion
Country-by-country analysis of
regulations for those who invest,
hedge or simply transact
Some countries are tightening

their regulatory frameworks,
others are relaxing them
We provide in-depth knowledge

needed to seize opportunities in
EM currencies
Disclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications in
the Disclosure appendix, and with the Disclaimer, which forms part of it.
Currencies ● Global
January 2023
Contents
Asia 3 Latin America 143

Chinese renminbi (CNY) 4 Argentine peso (ARS) 144
Offshore Chinese renminbi (CNH) 18 Brazilian real (BRL) 148
Bangladeshi taka (BDT) 31 Chilean peso (CLP) 152
Hong Kong dollar (HKD) 34 Colombian peso (COP) 156
Indian rupee (INR) 39 Mexican peso (MXN) 161
Indonesian rupiah (IDR) 44 Peruvian sol (PEN) 165
Malaysian ringgit (MYR) 49 Uruguayan peso (UYU) 168
Mauritian rupee (MUR) 56
Philippine peso (PHP) 58 Disclosure appendix 173
Singapore dollar (SGD) 64
South Korean won (KRW) 69 Disclaimer 176
Sri Lankan rupee (LKR) 74
Taiwan dollar (TWD) 78
Thai baht (THB) 82
Vietnamese dong (VND) 92
Europe, Middle East and Africa 97

Algerian dinar (DZD) 98
Armenian Dram (AMD) 100
Bahraini dinar (BHD) 102
Czech koruna (CZK) 103
Egyptian pound (EGP) 105
Ghana cedi (GHS) 107
Hungarian forint (HUF) 110
Israeli shekel (ILS) 112
Jordanian dinar (JOD) 114
Kazakh tenge (KZT) 115
Kenyan shilling (KES) 117
Kuwaiti dinar (KWD) 120
Omani rial (OMR) 122
Polish zloty (PLN) 124
Qatari riyal (QAR) 126
Romanian leu (RON) 128
Saudi riyal (SAR) 130
South African rand (ZAR) 132
Turkish lira (TRY) 134
UAE dirham (AED) 137
Ugandan shilling (UGX) 139
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January 2023
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January 2023
Asia
3
January 2023
Chinese renminbi (CNY)
 The People’s Bank of China (PBoC), China’s central bank, maintains

the currency in a market-based, managed float with reference to a
basket of currencies
 The RMB is partially convertible and has a deliverable (CNH) market
and a non-deliverable (CNY) offshore market
 The FX regime has undergone significant liberalisation in recent years
Normal Market Conditions In this document, we refer to the renminbi in three ways: RMB refers to the Chinese currency in
Onshore daily general, CNY refers to the RMB exchange rate onshore, and CNH refers to the RMB exchange
average spot USD30-35bn rate offshore.
volume:
Onshore average The following CNY-linked products are available:
spot transaction USD5-15m
size:
3-10 pips  Onshore spot FX, deliverable and non-deliverable forwards (cash settle in CNY), and FX
Onshore spot
(0.0005- swaps out to five years with further tenors on a case-by-case basis1
bid/ask spread:
0.0010CNY)
Onshore daily  Onshore deliverable FX options out to three years with further tenors on a case-by-case basis
average forward & USD70-90bn
swap volume:  Onshore deliverable cross-currency swaps out to five years with further tenors on a case-
Onshore daily
USD12bn by-case basis
average IRS volume:
Onshore forward & 
swap transaction USD15-20m Onshore deliverable interest rate swaps out to 10 years with further tenors on a case-by-case
size: basis
5-15 pips
Onshore forward 
(0.0010- Offshore non-deliverable forwards (NDFs) out to 10 years
spread:
0.0015CNY)
Onshore daily  Offshore non-deliverable FX options out to five years with further tenors on a case-by-case basis
average options USD0-0.1bn
volume:  Offshore non-deliverable cross-currency swaps out to five years
Onshore average
options transaction USD10-20m  Offshore non-deliverable interest rate swaps out to five years
size:
Onshore implied Please refer to the chapter entitled Offshore Chinese renminbi (CNH) for further details on the
option volatility 3M: 0.6 vol deliverable offshore renminbi.
spread:
Offshore daily NDF
USD1bn
average volume:
Average NDF
USD20m
Products
transaction size:
1M: 30-50 pips
NDF spreads: (0.0030- Spot
0.0050CNY) Onshore CNY FX spot is available with documentary proof of an underlying transaction. For an
Note: Spreads are subject to change with market individual’s spot FX transactions under the USD50,000 per annum quota, supporting documents
developments.
Source: HSBC are not needed. As of 1 August 2012, there has been a relaxation of documentary requirements for
foreign currency transactions related to the import and export of goods. Institutions that are
classified as Type A companies with good track records only need to submit one of three supporting
1 Onshore only – must be done through a designated FX bank.
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January 2023
Liquidity at a glance
12am 2am 4am 6am 8am 10am 12pm 2pm 4pm 6pm 8pm 10pm 12am
= least liquidity = moderate liquidity = most liquidity
Note: Times given are Beijing local time = GMT + 8 hours
Source: HSBC
documents (i.e. contract, invoice, or custom declaration form) prior to purchasing foreign currency.
These controls are subject to regulatory change.
Forwards/FX swaps
2023 Holiday Calendar In the onshore market, CNY forwards and FX swaps with maturities of up to five years are
30 Dec-1 Jan New Year’s Day available to onshore institutions to hedge FX exposure. However, documentary proof of
22-28 Jan Lunar New Year underlying exposure must be provided. The best liquidity is found in tenors of one year or less.
3-5 Apr Qingming Festival
On 15 May 2018, the State Administration of Foreign Exchange (SAFE) announced that banks can
29 Apr-3 May Labour Day
22-24 Jun Dragon Boat Day
now offer customers CNY cash settlement for USD-CNY hedging (domestic NDF). Similar to
29-30 Sep Mid-autumn Festival onshore Deliverable Forward (DF), this is to be based on genuine business needs and not for
1-7 Oct National Day speculation. This key feature of this product is that it allows corporates to do balance sheet hedging.
Source: China State Council
On 28 September 2022, People’s Bank of China (PBoC) re-implemented a 20% risk reserve
requirement on corporate FX forward contract purchases.
Additional Information
The People’s Bank of China
www.pbc.gov.cn
State Administration of Foreign Table 1: Key similarities and differences between onshore and offshore CNY NDF
Exchange Onshore Market Offshore Market
www.safe.gov.cn Product Types Onshore CNY cash settlement (NDF) Offshore CNY NDF
Ministry of Commerce Settlement currency Cash settlement in RMB Cash settlement in USD
www.mofcom.gov.cn Pricing curve Onshore CNY curve Offshore CNY NDF curve
National Development and Reform Fixing CFETS 1500 USD-CNY PBoC’s USD-CNY reference rate
Commission Foreign Exchange Administration Restrictions Genuine underlying No restriction
www.ndrc.gov.ch Hedging of balance sheet/cash flow risk Allowed Allowed
China Banking Regulatory Hedging of FX translation risk Allowed Allowed
Commission Hedging of CNY payment calculated based on Allowed Allowed
www.cbrc.gov.cn contracts denominated in FCY
China Securities Regulatory Hedging of foreign debt with rolling hedge Allowed Allowed
Commission Source: HSBC
www.csrc.gov.cn
Refinitiv Fixing Page
PBOCA, HSBCNDF, FX Options
SAEC,CHIBOR,SHIBOR, HSBCCN
Bloomberg Fixing Page Onshore market participants can buy or sell common vanilla European, ASN and American
APF options on the CNY against foreign currencies on a real needs basis. Tenors are available out
China Foreign Exchange Trade to three years with further tenors on a case-by-case basis. The best liquidity is found in tenors of
System
www.chinamoney.com.cn one year or less.
The SAFE started allowing corporates to sell FX options from August 2014 on a real needs
basis and with net settlement allowed. Previously, corporates were only allowed to buy FX
options onshore.
In the offshore market, USD-settled non-deliverable options (NDOs) are available on the CNY
out to five years and further tenors are available on a case-by-case basis. Options expire
simultaneously with the NDF fixing publication.
A range of FX structured products is also available for risk management or investment purposes.
Interest Rate Options

The China interbank market started LPR (Loan Prime Rate) interest rate option trading on
23 March 2020. European LPR caps/floors and LPR IRS swaptions are tradable in the market
at the moment.
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January 2023
Cross-currency swaps (CCS)

Since August 2007, institutions with FX forward licences – designated foreign exchange banks
(DFXBs) – have been able to trade CNY currency swaps in the interbank market. On the China
Foreign Exchange Trade System (CFETS) the currencies available to be traded against the
CNY in CCS are the USD, HKD, EUR, JPY, AUD and GBP.
Banks have been allowed to offer CCS to corporate customers since 1 March 2011. The foreign
currency regulations that apply to spot and forward transactions are similarly applicable to the
initial and final principle exchanges, respectively, in CCS. Customers can sign either ISDA or
NAFMII as their master agreement.
The USD rates in CCS could be SOFR or fixed rates. The CNY rates in CCS could be SHIBOR,
LPR rates, repo rates, or fixed rates. The tenor is up to 10 years and the best liquidity is within
three years.
As the accrual period and payment arrangement are highly customisable, CCS can be tailored
to match underlying assets/liabilities. Panda bond issuers receive CCS to convert CNY
proceeds into FCY, while other investors obtain synthetic CNY funding by borrowing FCY debt
and paying CCS.
CNY interest rate swaps (IRS)

Among participants in the national interbank market (hereafter referred to as market
participants), financial institutions that are qualified as market makers or as settlement agency
businesses may conduct IRS transactions with all other market participants.
Since 1 July 2014, all standard interbank IRS transactions are cleared at the Shanghai Clearing
House (SCH). All China Interbank Bond Market Scheme (CIBM) market participants must either
be a member of the SCH or a client of general clearing members for IRS clearing.
Offshore CIBM participants are allowed to sign ISDA as a master agreement for CNY IRS. For all
other market participants, NAFMII would be applied to all CNY IRS deals as the master agreement.
The PBoC introduced the new LPR (Loan Prime Rate) fixing mechanism in August 2019 and
made LPR the benchmark for CNY loans. LPR IRS are available for hedging purposes.
 LPR fixing mechanism: The one-year and five-year LPRs are calculated by the National
Interbank Funding Center (NIFC) using quotes submitted by quoting banks, which are
formed by means of adding basis points to the interest rate of open-market operations
(OMOs) (mainly medium-term lending facilities (MLF)). The quoting banks submit their
quotes before 0900 local time on the 20th day of every month (postponed in case of public
holidays) with 0.05% as the step length to the NIFC. The NIFC calculates the arithmetic
average of the rates after excluding the highest and lowest ones, and rounds it towards the
nearest multiple of 0.05%, to determine the LPR, which is then published at 0915 local time
on the same day on the websites of the NIFC and the PBoC.
A range of rates can be used for the floating leg of the IRS, including, but not limited to 7D repo,
3M SHIBOR, O/N SHIBOR and 1y/5y LPR.
The maximum tenor of IRS is up to 10 years.
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January 2023
FX framework
Exchange rate mechanism

 The CNY is partially convertible – convertible in current account transactions, subject to a
genuine background, but only on a restricted basis in the capital account.
 The China Foreign Exchange Trade System (CFETS) is the only trading platform for
interbank CNY FX dealing.
 Currently, 28 CNY-related currency pairs are traded on the CFETS: USD-CNY, EUR-CNY,
JPY-CNY, HKD-CNY, GBP-CNY, AUD-CNY, NZD-CNY, SGD-CNY, CHF-CNY, CAD-CNY,
CNY-MYR, CNY-RUB, CNY-ZAR, CNY-KRW, CNY-AED, CNY-SAR, CNY-HUF, CNY-PLN,
CNY-DKK, CNY-SEK, CNY-NOK, CNY-TRY, CNY-MXN, CNY-THB, CNY-KZT, CNY-MNT,
CNY-KHR and CNY-IDR. The last four pairs (i.e. CNY-KZT, CNY-MNT, CNY-KHR and
CNY-IDR) are regional trading pairs.
 The daily interbank USD-CNY spot rate trades within ±2% around the central parity rate
(the “fix”), announced at 0915 Shanghai local time. The bandwidths for the CNY against the
EUR, JPY, HKD, GBP, AUD, NZD, SGD and CAD are ±3% around their respective
reference rates; the bandwidths against the CHF, MYR, RUB, KRW, AED, SAR, HUF, PLN,
MXN, TRY, DKK, NOK and SEK are ±5%; and the bandwidths against the ZAR, THB, KZT,
MNT, KHR and IDR are ±10%.
 Since 24 August 2015, the CFETS began publishing market-based benchmark rates called
the CNY Reference Rate for USD-CNY 12 times each trading day (every hour from 1000 to
2300, except for 1200 and 1300 Shanghai local time).
 Effective 3 January 2023, trading on the China Interbank FX Market (CIFXM) has been
extended to the time period of 0930 until 0300 the next day Shanghai local time (from 0930-
2330 Shanghai local time before); however, the day’s closing price will still be taken at 1630
Shanghai local time.
 On 4 December 2017, the CFETS launched the Order Driven Mechanism (ODM) with the
Central Limit Order Book (CLOB), the order matching mode for spot trading. Currently, only
market makers can tap into this mode and this is available for USD-CNY spot only.
Fixing mechanism
 The CNY fix is taken two working days prior to the value date (e.g. value 28 April, fix
26 April, assuming 26-28 April are all normal working days) and is the rate at 0915
Shanghai local time as set by the PBoC. It is published on Refinitiv page SAEC.
 The CFETS, authorised by the PBoC, calculates and publishes the central parity of the CNY
against the USD and other major currencies each business day.
 The central parity of the CNY against the USD is determined in the following way: The
CFETS first enquires prices from all market makers before the opening of the market each
business day. The CFETS excludes the highest and lowest offers, and then calculates the
weighted average of the remaining prices in the sample as the central parity of the CNY
against the USD for the day. The weights are determined by the CFETS in line with the
transaction volumes of the respective market makers in the market, as well as other
indicators, such as the performance of market makers.
 According to the PBoC, market makers should refer to the closing USD-CNY rate of the
interbank FX market on the previous day, in conjunction with demand and supply conditions
in the FX market and exchange rate movements of major currencies. These directions
came into effect from 11 August 2015 and were made by the PBoC for the purpose of
enhancing the market orientation and benchmark status of the central parity rate.
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January 2023
 The PBoC subsequently clarified in its 1Q16 monetary policy report, published on 6 May
2016, that market makers, in their fixing quotation submissions, should also consider the
daily change in the USD versus components in the CFETS RMB basket (as well as the BIS
and SDR baskets).
 The CFETS started publishing a CNY nominal effective exchange rate index (known as the
“CFETS RMB index”) on 11 December 2015. The CFETS also started to publish CNY nominal
effective exchange rates based on the BIS currency basket and the SDR currency basket.
 The original CFETS RMB basket had 13 currencies: USD, EUR, JPY, HKD, AUD, MYR,
RUB, GBP, SGD, THB, CAD, CHF and NZD.
 An update was announced on 29 December 2016 (effective 1 January 2017). The RMB
basket was expanded to comprise 24 currencies. The additional currencies were: KRW,
SAR, AED, ZAR, MXN, TRY, PLN, SEK, DKK, HUF and NOK.
 Three additional updates were subsequently announced on 31 December 2019

(effective 1 January 2020), 31 December 2020 (effective 1 January 2021), 31
December 2021 (effective 1 January 2022) and 30 December 2022 (effective 1 January
2023).
 The 2023 basket weights are: USD (19.83%), EUR (18.21%), JPY (9.76%), KRW
(9.51%), AUD (6.07%), MYR (4.64%), RUB (3.85%), HKD (3.60%), THB (3.44%), GBP
(2.96%), SGD (2.47%), SAR (2.29%), MXN (2.27%), CAD (2.15%), AED (1.90%), ZAR
(1.43%), CHF (1.16%), PLN (1.11%), TRY (0.90%), SEK (0.55%), NZD (0.65%), DKK
(0.47%), HUF (0.41%) and NOK (0.40%).
 In May 2017, the China FX Committee (CFXC) suggested market makers incorporate a
“Counter Cyclical Factor” into the existing fixing mechanism. The new factor could help to
filter out excessive sentiment-driven volatility in the spot market (“herd behaviour”). The
“Counter Cyclical Factor” is decided by each individual market maker that contributes to the
fixing and it could be fine-tuned according to economic dynamics.
 On 9 January 2018, Bloomberg reported that market makers have been advised to
adjust the “Counter Cyclical Factor” in such a way that it would have no impact on the
fixing. On 24 August 2018, the CFETS reported that many fixing participation banks
have decided to adjust the “Counter Cyclical Factor” (CCF) from neutral to a stance that
would mitigate the pro-cyclical reaction of CNY depreciation and excessively negative
market sentiment amid trade tensions with the US. The CCF was then suspended in
late October 2020 as the broad USD weakened against the Fed’s ultra-loose monetary
policy amid the COVID-19 pandemic.
 On 27 September 2022, Reuters reported that the authorities have asked onshore
banks to incorporate a “counter cyclical (adjustment) factor” in their submissions for the
daily USD-CNY fixings. USD-CNY was rising because of the Fed’s policy tightening and
the weak Chinese economy.
 The CFXC was formed on 14 April 2017. It comprises representatives from the PBoC and the
SAFE, select committee members of the “The Self-Disciplinary Mechanism” and senior
market participants. The CFXC provides guidance to the Mechanism, which was, in turn,
established on 24 June 2016 to fulfil self-disciplinary responsibilities on USD-CNY central
parity rate quoting behaviour, wholesale interbank FX trading, and retail FX and cross-border
RMB businesses, so as to maintain fair competition and support the healthy and orderly
development of the FX market.
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January 2023
 The central parity of the RMB against the HKD is calculated using the cross rates between
the RMB central parity and the exchange rates of the USD against the HKD quoted at
international FX markets at 0900 local time, respectively.
 The central parity of the RMB against the EUR, JPY, GBP, AUD, NZD, SGD, CHF, CAD,
MYR, RUB, ZAR, KRW, AED, SAR, HUF, PLN, DKK, SEK, NOK, TRY and MXN is
determined in the following way: the CFETS enquires prices from market makers for the
aforementioned pairs, respectively, before the opening of the foreign exchange market
each business day, and excludes the highest and lowest offers, and then calculates the
average of the remaining prices.
Historical background
 On 21 July 2005, China announced a 2.1% one-off revaluation of the CNY against the USD
and the reform of the exchange rate mechanism where the CNY would no longer be
pegged to the USD but would instead be managed with reference to a basket of currencies
(the basket was not disclosed at that time but started to be published by the CFETS on
11 December 2015).
 Starting in late 2008, the authorities took concrete steps to accelerate the process of the
RMB’s internationalisation and open up the offshore RMB market. Please see the chapter
entitled Offshore Chinese renminbi (CNH).
 Interest rate liberalisation has also occurred. The PBoC removed the floor on lending
interest rates, effective 20 July 2013. The ceiling for the benchmark deposit rate was also
removed in October 2015.
 The USD-CNY daily trading band was widened to ±2% on 15 March 2014 (effective
17 March 2014) from a previous band of ±1%.
 On 9 December 2014, the SAFE announced that, in addition to banks, it would allow
financial firms to trade in the interbank FX market, effective on 1 January 2015. The rules
allow firms that trade currencies and derivatives in the spot market to also participate in the
interbank FX market without the need for further government approvals.
 The RMB was officially included in the IMF’s Special Drawing Right (SDR) basket with
effect from 1 October 2016 with a weight of 10.92%, joining the USD (41.73%), EUR
(30.93%), JPY (8.33%), and GBP (8.09%). The SDR basket weighting was updated on
1 August 2022. The RMB’s weight was raised to 12.28%. Weights for other currencies were
also adjusted: USD (43.38%). EUR (29.31%), JPY (7.59%) and GBP (7.44%).
Regulations on FX transactions
Principles
 China maintains controls on its currency, but progress has been made towards easing
these restrictions in recent years.
 There are in general two types of foreign currency accounts: capital accounts (for
investment and repatriation, loans, etc.), and current accounts (for trade, income and
current transfers). Non-financial institutions are allowed to open current accounts freely but
need supporting documents to open capital accounts.
 Corporates registered in China cannot buy or sell foreign currency offshore, unless they
obtain prior approval from the relevant authorities (for example, offshore initial public
offering (IPO) permitted by the China Securities Regulatory Commission (CSRC)).
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January 2023
 Any loan from abroad by residents is subject to controls. Such loans must be approved by
and registered with the SAFE.
 Cross-border trade-related transactions are permitted at what is effectively the CNY onshore
rate. This must occur through designated offshore clearing banks and the deals from offshore
participant banks must be supported by appropriate documentation from customers. Since late
August 2015, the PBoC expanded the underlying business scope for RMB cross-border
deals to include service-related trade transactions and direct investment. Forwards and
swaps are also allowed for cross-border CNY deals.
 Residents may hold foreign currency in onshore accounts.
 Since 9 June 2016, the SAFE has unified the policies on residential institutions’ voluntary
settlement of foreign exchange income under capital accounts.
 Offshore participants can now access the onshore CNY FX market through the following
channels: QFI, CIBM and Bond Connect (more details later).
 According to PBoC Document [2018] No. 96 and PBoC Document [2018] No. 159, qualified
overseas participating and clearing banks may apply to the CFETS for China Interbank FX
Market membership and conduct RMB purchases and sales for eligible cross-border FX
transactions (including cross-border RMB settlement of current account, direct investment
and approved investment, such as securities investment, etc., under the capital and
financial account).
Spot transactions
 All spot CNY FX transactions must be executed with a DFXB (Designated FX Bank).
DFXBs can offset their net CNY position in the CFETS.
 On the current account, the CNY is convertible, subject to genuine documentation. All
transactions are required to have proper eligible supporting documents. The repatriated
foreign currency collected from transit trade or foreign currency collected from good trades by
companies that are not classified as Type A shall first be put in an export foreign currency
account, which is opened in the name of the enterprise at a bank and is subject to inspection.
The range of incomes and payments shall be provided for foreign exchange administration.
For purchasing foreign currency, relevant supporting documents need to be provided.
 For loan account transactions, CNY conversions require the SAFE’s approval and other
supporting documents.
 For foreign exchange income under the capital account (including foreign currency capital
injections, external debt funds, and funds returning from offshore listings), CNY conversions
may be settled by way of voluntary settlement at banks, if these are required in the
companies and institutions’ actual business operations. The CNY funds shall be managed
under the account for payment of settled foreign exchange, and the usage shall comply with
the principles of authenticity and self-use within the business scope.
Forwards, FX swaps and options

 Onshore entities can access the local forwards market provided these contracts are used to
cover current account transactions. However, documentary proof, such as trade
agreements, must be provided on the settlement date.
 Onshore entities can also access the local forwards market for hedging of the following
capital items:
 Repayment of domestic foreign currency working capital loans
 Repayment of external debt registered with the SAFE
 Income or expenses of direct investment registered with the SAFE
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January 2023
 Facilitation of capital injections of foreign investment enterprises registered with the SAFE
 Remittance of foreign currency income of an overseas-listed domestic company

registered with the SAFE
 Any other transaction with the SAFE’s approval

 Vanilla European options and any combination of European options can be traded on the
interbank market and with customers. Upon maturity of the options, if a customer’s option
needs to be settled, banks must conduct an authenticity and regulatory examination to
ensure the receipt and the payment of foreign exchange delivered by a customer are
compliant. However, net settlement is also allowed for option transactions, but this needs to
be chosen when the transaction is booked.
 The net open position (NOP) limits on synthetic CNY FX exchange positions are set by the
SAFE for each DFXB. A negative minimum limit was allowed as part of the FX liberalisation
process since 16 April 2012. In May 2013, the SAFE announced minimum NOP limits based on
banks’ FX loan-to-deposit ratios. However, these limits were removed as of 1 January 2015.
 In September 2015, the PBoC implemented a temporary macro-prudential measure,
requiring banks to keep the equivalent of 20% of the nominal value of their customers’ ‘Buy
USD’ business in USD reserves to be held for one year at zero interest (forward reserve
charge). For options, the ratio was 50% of the nominal value and 100% for forwards and
swap derivatives. The forward reserve charge was then suspended in September 2017.
However, it was reintroduced in August 2018 when the RMB came under depreciation
pressures again amid trade tensions with the US. It was removed in October 2020 and then
re-implemented on 28 September 2022 (Chart 1).
Chart 1: History of PBoC’s counter cyclical measures since the 11 August 2015 fixing
reform
108 Aug-15: Dec-21: 6.1
Sep-17: Jan-18: RRR hike on 6.2
106 Fix ing reform CCF removed
reserv e Oct-20: FX deposits 6.3
charge Reserv e charge &
104 6.4
May -17: remov ed Aug-18: CCF removed
102 6.5
CCF Reserv e charge & CCF
introduced reintroduced 6.6
100 6.7
Sep-15: Apr-22:
98 20% reserve RRR cut on 6.8
charge on FX deposits 6.9
96 RHS Sep-22: 7.0
forw ards RRR cut on FX
94 May -21: deposits; RR on RHS 7.1
RMB appreciation
RRR hike on forwards; CCF 7.2
92 reportedly
RMB depreciation FX deposits 7.3
reintroduced
90 7.4
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
CFETS RMB Index USD-CNY fix USD-CNY spot (RHS, reverse scale)
Source: Bloomberg, HSBC
Regulations for FX conversion and repatriation
Cross-border portfolio investments

For more details on programmes allowing investment using the CNH (e.g. QFI, Stock Connect),
and comparison of all these programmes, please see the CNH chapter.
 QFI (QFII and RQFII are now collectively referred to as QFI): The Qualified Foreign
Investor (QFI) scheme, a combination of the previous the Qualified Foreign Institutional
Investor (QFII) scheme and RMB Qualified Foreign Institutional Investor (RQFII), allows
11
January 2023
institutional investors that meet certain criteria to invest in a variety of securities and
financial products onshore. On 12 June 2018, the SAFE and the PBoC jointly released the
revised 2018 QFI rule, which removed the lock-up period and repatriation restrictions. QFIs
may conduct FX derivatives business via local custodians or domestic financial institutions
that have been granted a license to conduct business in FX derivatives (“Dealing Agent of
the FX Derivatives”). Such FX transactions shall conform to the principle of actual needs.
On 10 September 2019, the SAFE announced that all previous quota limitations for QFIs
would be removed. Further, on 20 May 2020, restrictions on the investment quota for QFIs
were removed. QFIs will no longer need to apply for any investment quota from the SAFE
and may choose currencies and the timing of inward remittance based on their own
decisions. It standardised and simplified administrative requirements on the remittance and
repatriation of funds, as well as currency exchanges by QFIs.
 Central banks and similar Institutions: On 30 September 2015, the PBoC announced that
foreign central banks and similar institutions (international financial institutions, and sovereign
wealth funds) are allowed access to the interbank FX market to promote the openness of
China’s FX market. These institutions could access the market through three channels,
including: 1) entrusting the PBoC as their agent, 2) using interbank FX market members as
their agent(s), and 3) directly participating in the interbank FX market as foreign members.
Foreign central banks and similar institutions can choose one or more of the mentioned
channels to conduct trading of all traded FX products, including spots, forwards, swaps and
options through bilateral or anonymous trading methods, without any quota restrictions.
 CIBM and Bond Connect: The CIBM started in 2010 to give offshore investors access to
China’s interbank bond market. To attract more inflows, especially from offshore fund
managers, the Bond Connect was designed in 2017 and officially incorporated block trade
and delivery-versus-payment (DVP) functions in August 2018. Since July 2022 foreign
institutional investors can also access the exchange bond market via the CIBM scheme and
the Bond Connect, which was previously only available to QFI investors.
 CIBM: On 27 February 2017, the SAFE released a ‘Circular on Issues Concerning CIBM
Overseas Institutional Investors’ (OIIs) FX Risk Control’ – allowing OIIs under PBoC [2016]
No. 3 Announcement to trade over-the-counter FX derivatives (including FX forwards, FX
swaps, currency swaps and options, etc.) in China through their settlement agent bank. OIIs
shall follow the “Trading on Actual Needs” principle when conducting FX derivatives
business. Such investment is for the purpose of hedging OIIs’ FX exposure arising from the
inward remittance related to CIBM investments. FX derivatives exposure shall be reasonably
related to the bond investment exposure. When the FX risk exposure varies due to changes
in CIBM investment positions, OIIs shall adjust corresponding FX derivatives exposure
within five working days to ensure the positions are on an actual needs basis. The FX
proceeds and payments arising from the FX derivatives investment should be settled in the
Special Foreign Currency Account opened for facilitating CIBM investments.
 On 18 June 2018, the PBoC issued Circular 159 to allow domestic agent banks,
overseas clearing banks and overseas participant banks to handle the business of
buying and selling RMB, and to satisfy demand for cross-border RMB settlement for the
purpose of current account transactions and other capital and financial transactions,
such as direct investment and approved securities investments (which include the Stock
Connect, the Bond Connect, the CIBM and QFIs as further clarified); the tradable
varieties include spot exchange, forward exchange, foreign exchange swaps, currency
swaps and currency options. Overseas participant banks may commission domestic
agent banks or overseas clearing banks, or directly enter the domestic interbank foreign
exchange market to square positions. Such FX transactions shall conform to the
principle of actual needs.
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January 2023
 In January 2020, the SAFE published a new circular relating to onshore FX derivative
transactions for OIIs to hedge investments via the CIBM Direct scheme. Bank entities can
choose to execute FX derivatives trading: 1) directly with up to three domestic financial
institutions, or 2) participate in the CIFXM as a member of the CFETS, or 3) participate in
the CIFXM as member via a FX Prime Broker; for non-bank entities, they can only choose
Option 1 and Option 3, above, to execute FX derivatives for hedging purpose. Upon FX
exposure change due to bond investment, OIIs shall do FX position adjustment either
within five working days or within the first five working days of each month.
 In November 2022, to make its bond market more attractive to OIIs, the PBoC and the
SAFE jointly published a new rule to expand FX hedging channels and make it easier for
OIIs to repatriate funds, among other relaxation and optimisations: 1) Sovereign-type
overseas investors (including central banks, sovereign funds, etc.) are allowed to do OTC
FX trades (including spot and derivative) with China onshore qualified FX institutions; 2)
Restriction on the number of FX counterparties a CIBM-investor can face for FX derivatives
is now uplifted (before that, it is restricted to three counterparties); 3) For CIBM-investors
with mixed “RMB+FCY” injection, the repatriation ratio control is now imposed on FCY only,
and the ratio will be relaxed to 120% from 110%, i.e. the amount of accumulated outward
remittance in foreign currency cannot exceed 120% of the accumulated inward remittance
amount in foreign currency. The ratio could be further relaxed for long-term investors.
 Bond Connect: In conjunction with the launch of the Northbound Bond Connect on
3 July 2017, the PBoC further allowed Northbound Bond Connect investors to convert
their foreign currencies into RMB onshore and conduct related hedging by way of cross-
border CNY transactions through their designated Bond Connect Hong Kong settlement
banks. Only FX hedging is permitted with instruments, including FX forwards, FX swaps
and FX options. The Northbound Bond Connect Hong Kong settlement banks could
square their positions onshore through the CFETS since they are direct members of the
CFETS. For FX hedging through overseas clearing banks and overseas participant
banks, please refer to the above section on the CIBM.
 As of September 2020, each Northbound Bond Connect investor can select no more
than three Hong Kong-based settlement banks to conduct currency conversion and
foreign exchange hedging services. This development now brings Northbound Bond
Connect investors on an equal playing field with CIBM Direct investors, as it permits the
use of three banks to execute FX.
 The Southbound Bond Connect was launched on 24 September 2021. Eligible investors
for this programme include the 41 OMO primary dealers, as well as qualified domestic
institutional investors (QDII) and renminbi QDII (RQDII). Due to technical constraints,
only HKD and CNY bonds can be traded in the initial phase of the scheme, but system
upgrades will eventually broaden the investment scope to bonds denominated in all
currencies. The programme is designed to be closed-looped and an annual quota of
RMB500bn and a daily quota of RMB20bn are currently imposed.
 Wealth Connect: Launched in September 2021, the Cross-boundary Wealth Management
Connect Scheme (“Wealth Connect”) provides individual retail investors with a formal channel
to open and operate cross-boundary investment account directly. It is designed as a closed-
loop system with an individual quota of RMB1m and a total cap of RMB150bn each for both
ways. The Northbound channel will offer wealth management products (WMPs; level 1 to level
3 risks, non-principle guaranteed) and publicly offered investment fund products (R1 to R3 risk).
The Southbound channel can offer “non-complex” and low-to-medium risk products, such as
bonds (to be further clarified with the HKMA), SFC-authorised funds that are domiciled in Hong
Kong, and deposits (HKD, RMB and FCY). Each investor can only open one dedicated
investment account and one dedicated remittance account.
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January 2023
Dividends, cross-border direct investments and financing activities

 Dividends: Since July 1996, the authorities have allowed free CNY convertibility related to
current account items, including the payment of dividends from after-tax profits, to be
conducted at designated FX banks and supported by written resolutions of the board of
directors concerning profit distribution, audit reports and tax clearance documents.
Corporates can choose to repatriate CNY as dividends overseas following the launch of
RMB cross-border channels.
 RMB overseas direct investments: Effective on 6 January 2011, subject to the approval
by the relevant Chinese authorities, onshore enterprises (excluding financial institutions)
may use the RMB for overseas direct investment, including but not limited to the
establishment of new entities and/or undertaking projects overseas, acquisitions or share
participations in target entities and/or projects overseas.
 Foreign debt: Repayment and repatriation of principal and interest of foreign currency debt
are capital account items and were subject previously to the SAFE’s approval. However,
such requirements have been abolished in May 2013 under the SAFE’s Circular [2013] No.
19. Though the SAFE’s approval is no longer needed, banks still need to verify the genuine
background through documentation and the SAFE’s online system.
 MNCs’ cross-border sweeping and guarantees: In May 2014, the SAFE simplified and
standardised the administrative process for cross-border guarantees, which allow companies
to provide credit support to overseas financing activities more easily. In November 2014, the
PBoC expanded the Intra-group Cross-Border RMB Cash Concentration two-way sweeping
scheme nationwide – allowing large multinational companies (MNCs) in China (and not just
those in the Shanghai Free Trade Zone) to sweep working capital funds cross-border more
easily. In September 2015, the PBoC raised the cap on the net inflow of cross-border RMB
funds, and the threshold and market access requirements for companies to participate in the
two-way sweeping scheme were lowered and relaxed, which gave MNCs more freedom to
allocate their funds. The PBoC introduced RMB cross-border cash sweeping via Free Trade
Account (FTA) in 2016 to boost Shanghai Free Trade Zone (SFTZ) business and RMB
Internationalisation. The SAFE issued revised guidance (i.e. SAFE Regulation No. 7 [2019]) in
March 2019 and Q&A Session II in November 2020 to further provide more clarity and
facilitate the implementation of cross-border cash sweeping. For a comparison of the different
cash pooling and intra-group lending schemes, please refer to Table 2.
 Panda bonds repatriation: China started to allow approved foreign institutions to issue
Panda bonds in the onshore market in 2005. Starting from 2013, the PBoC also allowed
foreign institutions to repatriate the RMB proceeds raised from Panda bond issuance for
offshore market usage. Issuers include sovereigns, corporates and financial institutions and
the Panda bonds type varies from private placement to public placement.
Shanghai Free Trade Zone (SFTZ)

 Following the “Guiding Opinion” over financial reforms regarding the SFTZ announced on
2 December 2013, the PBoC further announced the implementation details on free trade
accounts (FTAs) on 22 May 2014.
 Financial institutions are allowed to open FTAs for entities (FTE) and individuals (FTI) that
are characterised as residents of the SFTZ. These accounts will be termed FTE and FTI,
respectively. Non-resident legal entities or other organisations and individuals are also
allowed to set up FTAs, under the tag of FTN and FTF, respectively. FTEs and FTNs may
be opened with eligible financial institutions in Shanghai, which need to apply for a license
for setting up a free trade unit (FTU), no matter whether they set up a physical presence in
the SFTZ. Financial institutions need to properly separate FTAs and onshore accounts in
their accounting procedures.
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January 2023
 There can be ‘free’ transfers between FTAs, non-resident FTAs, and offshore accounts, but
the word ‘free’ has not been clearly defined in the regulations and there may still be
restrictions on moving funds between these accounts. Transactions between a resident’s
FTA and same-name domestic settlement accounts are treated as being cross-border
transactions. They are currently limited to:
 Current account transactions

 Foreign direct investments
 Repayment of self-owned RMB loans with a duration longer than six months borrowed
from Shanghai-based financial institutions
 Other cross-border transactions allowed by the PBoC, Shanghai
 FTA transactions started with the RMB initially and they were expanded to include foreign
currencies in 2015. This regulation allows RMB transactions using FTAs for current account
businesses, foreign direct investments and repayment of onshore debt, while taking a step-
by-step approach towards other transaction types, such as investments in capital markets,
derivatives and hedging activities, etc., which will be subject to further implementation rules.
In 2015, banks were allowed to provide derivatives products in FTAs; however, the product
scope was the same as in the onshore market.
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January 2023
Table 2: Comparison of different cross-border loan and cash sweeping schemes

RMB intra-group RMB cross-border RMB cross-border sweeping RMB cross-border
FCY cross-border sweeping outbound lending sweeping via the nationwide sweeping via FTA
SAFE Notice 7 or via the SFTZ# PBoC Notice 306 SFTZ PBoC Notice 279* PBoC Notice 122 [2016]
Fund flows Supports both net lending out from China Supports only net Supports both net Supports both net lending out Supports both net lending
and net borrowing into China lending out from lending out from from China and net borrowing out from China and net
China China and net into China borrowing into China
borrowing into China
Target customers Genuine business needs Domestic non- Domestic leading Sum of all domestic participants’ Group companies with one
Proper FCY management and internal finance enterprises company must be annual turnover ≥ CNY1bn onshore entity meeting any
control policy At least one year of registered and Sum of all overseas participants’ one of following criteria to
Good track record for the last three years operation operating in the annual turnover ≥ CNY200m open FTE account:
Type A classification of goods trade Equity relationship SFTZ All domestic and overseas 1) Registered in the SFTZ
Last year’s minimum value of cross- with borrower participants must be in 2) On the PBoC’s
border transactions: USD100m (via operation for at least one year scientific innovation
Notice 7) (for cross-border sweeping Leading company can be either enterprise list, or
under the SFTZ scheme, the entry a domestic or overseas 3) On the extended SFTZ
criteria is lowered to USD50m (Notice corporation enterprise list issued by
[2018] No.1) the Shanghai
For cross-border sweeping under the government
SFTZ scheme, domestic leading
company must be registered and
operating in the SFTZ
Use of proceeds Domestic participants commit to only use For genuine and Domestic participants No restrictions as long as it Domestic participants
such funding according to their approved reasonable purposes commit to only use meets onshore participants’ commit to only use such
business scope such funding to meet business scope; such funding is funding to meet their
their business forbidden to be invested in business production and
production and securities and derivatives operational needs
operational needs markets, used to purchase not
self-used properties and
entrusted loan (except for
domestic participants)
Borrowing quota (In) Up to 200% of the sum of the owner’s Zero, given under No regulatory Total owners’ equity x coefficient Total domestic participants’
equity (i.e. net assets) of all domestic this scheme net inbound borrowing ratio (coefficient ratio: 0.5) owners’ equity x coefficient
participants borrowing from quota; to be set by ratio (coefficient ratio: 1.0)
overseas is customers and banks
prohibited jointly based on all
domestic participants’
working capital needs
Source of funds Can be domestic participants’ self-owned
cash, or proceeds obtained through FX Self-owned funds generated from operating and investment activities
Lending quota Up to 30% of the sum of the owners’ Owner’s equity of No regulatory Total owners’ equity x coefficient Total domestic participants’
(Out) equity (i.e. net assets) of all domestic lender x coefficient outbound lending ratio (coefficient ratio: 0.5) owners’ equity x coefficient
participants ratio (coefficient ratio: quota; to be set by ratio (coefficient ratio: 1.0)
0.3) customers and bank
jointly based on the
lender’s financial
statement
Source: HSBC. Note: Local regulators may impose different requirements. Please consult local compliance functions.
#The difference between SAFE Notice 7 (2019) and the SFTZ scheme is the eligibility requirement as listed in the field of ‘Target customer’.
*Notice 279 (5 September 2015) is an improved version of Notice 324 (2014) with eligibility requirements further relaxed.
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January 2023
Individuals’ FX conversion rules

 For residents, under current account purposes:
 Annual quota of USD50,000 for conversion in both directions
 Daily limit of USD50,000 for foreign currency remittance out of mainland China
 Any conversion/FCY remittance exceeding the above daily limit is subject to

supporting documents
 For non-residents, under current account purposes (including Hong Kong, Macau
and Taiwan):
 Annual quota of USD50,000 for conversion from FCY to RMB; any conversion
exceeding this limit is subject to supporting documents
 Any conversion from RMB into FCY is subject to supporting documents
 No daily limit for FCY remittance out of mainland China

 For Hong Kong, Macau and Taiwan residents (under the Closer Economic Partnership
Arrangement (CEPA)), under current account purposes:
 Daily transfer limit of RMB80,000 from Hong Kong and Taiwan
 Daily transfer limit of RMB50,000 from Macau
 Both principal and interest can be repatriated to Hong Kong, Macau and Taiwan
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January 2023
Offshore Chinese renminbi

(CNH)
 The Chinese renminbi (RMB) became deliverable offshore in Hong

Kong in July 2010; RMB traded offshore is referred to as CNH
 CNH can generally be transferred freely between offshore accounts,
and banks can create and sell investment products
 The offshore RMB market is developing rapidly and the interaction
with onshore is growing
Normal Market Conditions In this document, we refer to the renminbi in three ways: RMB refers to the Chinese currency in
Daily average spot general, CNY refers to the RMB exchange rate onshore, and CNH refers to the RMB exchange
USD15-20bn
volume: rate offshore.
Spot volume per
USD10m
transaction:
Since 19 July 2010, the transfer of RMB funds between accounts and across banks for any
5 pips
Spot bid/ask spread:
(0.0005CNH) purpose in the offshore market has been allowed. The transfer of RMB between onshore and
Daily average forward offshore is still subject to regulations and approval by mainland China’s authorities.
USD25-30bn
volume:
Forward & swap
volume per USD20m CNH is the common currency code used to reference offshore RMB traded in the Hong Kong
transaction: market, as well as in other offshore centres.
10 pips
1-year swap spread:
(0.0010CNH) The following products are available:
Daily average options
USD10-12bn
volume:  Spot FX, deliverable forwards and FX swaps
Average options
USD100m
transaction:
 Deliverable FX options out to five years with further tenors on a case-by-case basis
Implied option volatility
3M: 0.1 vol
spread:
 Bonds
Note: Spreads are subject to change with market
developments.
Source: HSBC  Time deposits and certificate of deposits
 Currency swaps and interest rate swaps
 Structured products, including structured deposits, notes and swaps
 Exchange-traded products, including equities, exchange-traded funds, real estate
investment trusts and CNH futures
Spot
Participating banks in Hong Kong provide two types of spot RMB exchange rate transactions:
1) for trade, service and direct investment purposes, and 2) for general purposes.
The first type of transactions initially referred to trade only but was expanded to include direct
investments and service trade transactions on 18 August 2015. Foreign exchange positions
resulting from the first type of transactions can be offset with the clearing bank or onshore
correspondent banks, so the offshore market generally trades close to the onshore rate. Initially,
there was a quota for trade-related transactions on how much the clearing bank in Hong Kong
18
January 2023

Note: Times given are Beijing local time = GMT + 8 hours
Source: HSBC
could settle for trade-related transactions. The details of the quota were undisclosed, but it was
2023 Holiday Calendar (HK) believed to be around RMB8bn of net buying and selling per quarter in 2011, and was reviewed
2 Jan New Year’s Day on a quarterly basis. There has been no update on the details since then. There are no
23-25 Jan Lunar New Year
conversion quotas for onshore correspondent banks.
5 Apr Ching Ming Festival
7-8 Apr Good Friday & Day For the second type of transactions, i.e. general purpose transactions other than for trade,
after Good Friday service and direct investments purposes, banks need to warehouse the risk or offset the
10 Apr Easter Monday
position in the interbank USD-CNH market; therefore, this exchange rate can differ from the
1 May Labour Day
26 May Buddha’s Birthday onshore spot exchange rate.
22 Jun Tuen Ng Festival Overall, the average interbank spot market liquidity is around USD15-20bn per day.
1 Jul SAR Establishment
Day Forwards/FX swaps
30 Sep Day after Mid-Autumn
CNH deliverable offshore forwards are available out to five years. Liquidity has improved
Festival
2 Oct National Day holiday significantly and has surpassed turnover in the non-deliverable forwards market. The curve is based
23 Oct Chung Yeung Festival broadly on the offshore USD and RMB money market interest rate differential. The interest rate
25 Dec Christmas differential has been exerting a stronger influence on the curve. The forward-implied interest rates
26 Dec Day after Christmas are tracking onshore rates more closely as the convergence between the onshore and offshore
Source: Hong Kong SAR Government
markets increases.
Additional Information Options

Deliverable CNH options are available without restrictions to any non-individual counterparty
The Hong Kong Monetary Authority
www.info.gov.hk/hkma (i.e. corporates and investors) that has a physical CNH nostro account in Hong Kong or other
The Securities and Futures clearing centres. Options on USD-CNH and CNH crosses are available out to five years, and
Commissions beyond on a case-by-case basis. The average transaction size is USD100m with a daily
www.sfc.hk
Invest Hong Kong turnover of USD5-6bn.
www.investhk.gov.hk
The People’s Bank of China Currency swaps
www.pbc.gov.cn Cross-currency swaps (CCS) for the CNH are available, predominantly against the USD out to five
State Administration of Foreign
years with the ticket size averaging USD20m and daily turnover of USD400m. Transactions out to
Exchange
www.safe.gov.cn 10 years or longer are considered on a case-by-case basis. In general, customers have been
China Banking and Insurance moving their interest from the long-established non-deliverable cross-currency swap (NDS) market
Regulatory Commission
www.cbrc.gov.cn to the CCS market. Therefore, the liquidity for CNH CCS has constantly been improving.
China Securities Regulatory
Commission Interest rate swaps
www.csrc.gov.cn The interbank money market has grown. Offshore deposit rates can differ from those onshore
HSBC Refinitiv Page due to a lack of transactional demand for funds. Offshore term deposit rates continue to price
HSBCRMB
with a spread over those from onshore due to higher uncertainty in offshore funding. The CNH
Hong Kong Interbank Offered Rate fixing (CNH HIBOR fixing; launched on 24 June 2013)
provides an offshore floating interest rate benchmark for the development of the IRS market.
CNH IRS based on 3m HIBOR is available to the market. The onshore and offshore rates are
expected to converge more closely in the long run when either offshore bond markets are
developed further or when banks are able to access onshore CNY bond markets more freely.
Banking and structured products

A number of hedging products are available for risk management or investment purposes.
These include vanilla, European barrier and digital options to hedge RMB exposure against any
other currency with physical settlement. Various investment products in RMB, such as
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January 2023
structured deposits (linked to FX, rates, equities or gold), notes or swaps, are available out to
two years. These can be traded with RMB as the underlying currency or as part of a basket and
can be structured to suit bespoke needs.
Dim Sum bonds

The primary and secondary markets for offshore RMB bonds issued in Hong Kong are developing.
Mainland China’s Ministry of Finance (MoF) has been issuing government bonds in Hong Kong for
the purpose of establishing an offshore CNH yield curve. The current term structure has been
extended to as long as 30 years with a good investor base mix. Primary issuance is conducted twice
a year to meet increasing demand, while secondary market activity is expected to improve over time.
On September 2018, the PBoC signed a Memorandum of Understanding with the Hong Kong
Monetary Authority (HKMA) to tender and issue bills through the Central Money Markets Unit (CMU)
platform with the aim to enrich renminbi products and provide offshore RMB liquidity management
tools for financial institutions. Both the PBoC and the MoF have issued RMB bills/bonds in London;
these were the first Chinese sovereign issuances outside mainland China and Hong Kong. The
offshore curve valuation differs from that of onshore comparable bonds because of the different
dynamics in supply and demand and the funding cost between onshore and offshore markets.
CNY synthetic bonds (priced out of the NDF curve) and total return swaps (TRS) on both
onshore and offshore RMB bonds are available. The expansion of the Qualified Foreign
Investor (QFI), the Interbank Bond Market (CIBM) and Bond Connect schemes is expected to
expedite the onshore-offshore bond market convergence.
In August 2018, the PBoC announced that it would start to issue CNH bills through the CMU
platform of the HKMA on a more regular basis to help expand the range of CNH-denominated
financial products in Hong Kong. It first issued RMB20bn in bills in November 2018, followed by
routine issuance in following years.
In October 2022, Hainan issued the first batch of sustainability dim sum bonds by a Chinese
provincial government worth RMB5bn. More issuances of dim sum bonds by provincial
governments are likely in the pipeline, which will enrich the CNH debt products and advance
RMB internationalisation.
Opening an account in CNH

All customers can open a RMB account in Hong Kong and are subject to normal account
opening procedures. Banks can provide customers with general purpose RMB accounts, which
allow free transfers of funds (offshore) for any purpose, though positions arising from this cannot
be offset through the clearing bank.
Offshore RMB accounts can also be opened in other jurisdictions and are subject to local
regulations. After the appointment of RMB clearing banks in these centres, offshore RMB
activity can also be cleared in these jurisdictions.
CNH loans
Offshore RMB loans to designated business customers and personal customers are permitted.
Banks may borrow funds from mainland China correspondent banks for up to 12 months to
make loans related to trade finance.
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January 2023
FX framework

 Offshore RMB is traded as a fully deliverable currency offshore.
 The CNH trades freely against the USD without the constraints of a trading band that the
onshore CNY rate has; however, market forces usually minimise the spread between the two
rates. Market forces mostly refer to offshore FX positions resulting from trade, service and
direct investment that can be squared with the clearing bank or onshore correspondent banks.
Increasingly, cross-border portfolio flows are also playing an important role in driving demand
and supply of CNH.
 With effect from 1 August 2016, the official name of the Spot USD-CNH fixing has been
amended to the USD-CNH (HK) Spot Rate. The benchmark is calculated based on actual
transactions executed in a window of 30 minutes centred at 1100 HKT. The eligible
transactions are those executed through an Approved Money Broker with a dedicated FX
spot business, having a transacted amount of at least USD1m and transacted between
1045 HKT and 1115 HKT. The benchmark is calculated as the volume-weighted median of
the eligible transactions. This is published on Refinitiv page CNHFIX at 1130 HKT.
 Bank of China (Hong Kong) is the designated clearing bank in Hong Kong and provides the
platform for CNH settlement for the offshore market.
 The HKMA expects banks in Hong Kong to treat offshore RMB in the same way as other
currencies in respect of managing their foreign exchange risks.
Historical background
 In late 2003, the PBoC and the HKMA agreed that Hong Kong banks could conduct
personal RMB business on a trial basis. Bank of China (Hong Kong) was designated as the
RMB clearing bank in Hong Kong.
 In 2004, the clearing bank began to provide services for participating banks to offset RMB
open positions that resulted from permitted RMB exchange business.
 In 2008, the PBoC and the HKMA signed an agreement to set up a currency swap line. The
size was doubled to RMB400bn in 2011.
 In July 2010, the PBoC and Bank of China (Hong Kong) signed an agreement lifting the last
restrictions on Hong Kong’s RMB interbank market. This removed restrictions on banks in
Hong Kong to establish RMB accounts or provide related services to corporates. Individuals
and corporations were also able to conduct RMB payments and transfers through banks.
This gave the green light to non-bank financial institutions to open RMB accounts held at
different Hong Kong banks for any purpose.
 The Treasury Market Association of Hong Kong launched the spot USD-CNH fixing on
27 June 2011 to provide a reference rate for offshore RMB products.
 The first deliverable RMB futures started trading on the Stock Exchange of Hong Kong
(SEHK) on 17 September 2012.
 On 26 June 2013, the Treasury Market Association of Hong Kong launched the CNH Hong
Kong Interbank Offered Rate fixing to provide a benchmark for loan facilities and RMB
interest rate products.
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January 2023
Regulations on cross-border flows
Basic principles
 Foreign exchange positions resulting from goods and service trades and direct investments
can be squared with the clearing bank or onshore correspondent banks.
 Offshore RMB accounts may be set up in other jurisdictions and offshore RMB may be
remitted to any other foreign centre, subject to local regulations. There are usually few
restrictions and, as such, the offshore yuan in different offshore centres is fungible.
Individuals’ conversion
 The daily conversion limit for Hong Kong residents of RMB20,000 was removed, effective
17 November 2014. Also, these RMB conversions will be conducted in the offshore market,
instead of onshore through the designated RMB clearing bank. The daily remittance limit to
mainland China remains at RMB80,000, subject to the rules and requirements of
mainland China.
Trade settlement
 In June 2009, the State Council approved RMB trade settlement on trade between Hong
Kong and Guangdong/Yangtze River Delta and a supplementary memorandum was signed.
Over the next few years, the trade settlement scheme was gradually rolled out nationwide.
 In March 2012, the PBoC announced that all qualified exporters were eligible to settle trade
in RMB for the export of goods without prior approval as a special mainland designated
enterprise (MDE). The MDE requirements were replaced by a watch list in June 2012, fully
opening the cross-border RMB trade settlement channel.
FDI
 In April 2011, the PBoC initiated the start of a trial programme for inward foreign direct
investment denominated in RMB in a few areas, such as Guangdong. In October 2011, the
programme was expanded nationwide, but case-by-case approval by mainland China’s
Ministry of Commerce (MOFCOM) was required.
 As of 1 January 2014, specific RMB FDI rules were replaced by existing FDI rules for
foreign currencies. Previously, investments over RMB300m or in certain industries required
specific approval from mainland China’s MOFCOM, but this is no longer the case. If a
foreign investor has obtained the MOFCOM’s approval for FDI in foreign currency, there is
no need to re-apply for approval to change the capital currency into RMB.
 FDI rules were further simplified in mainland China’s many economic pilot zones or free trade
zones, where the approval by the MOFCOM was replaced with a filing with local authorities.
 Restrictions on using RMB capital injections for investments in the onshore security
markets, financial derivatives or entrusted loans still apply.
ODI
 In January 2011, the PBoC allowed mainland Chinese banks and enterprises to make
overseas direct investments (ODI) in RMB for the first time.
 On 6 October 2014, mainland China’s MOFCOM simplified the rules on making outbound
investment by mainland Chinese corporates by abolishing approval for most outbound
investment by domestic firms and shortening the lead time for the filing process.
Cross-border investment schemes

 Mainland China’s cross-border portfolio investment liberalisation started as early as 2002,
when the inward Qualified Foreign Institutional Investor (QFII) scheme was first allowed,
followed by the outbound Qualified Domestic Institutional Investor (QDII) scheme in 2006.
Both schemes convert on onshore USD-CNY exchange rates.
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January 2023
 The RMB-denominated investment scheme only started in 2010, first through the Interbank
Bond Market (CIBM) scheme. The CIBM programme allowed three types of offshore
institutions – clearing banks, RMB trade settlement banks, and central banks – to reinvest
offshore RMB (CNH) accumulated from cross-border trade settlement into the onshore
interbank bond markets. Following the development of the offshore yuan market and
progress on liberalisation of onshore markets to offshore investors, other important RMB-
denominated schemes, including the RQFII (RMB Qualified Foreign Institutional Investor,
2011), Stock Connect (2014), Northbound Bond Connect (2017), Southbound Bond Connect
(2021), Wealth Connect (2021) and others, were also introduced over time.
 In November 2020, the QFII and RQFII were merged into a new Qualified Foreign Investors
(QFI) regime, which allows for a one-time application with relaxed entry criteria and simplified
application documents.
23
24
Chart 1: Cross-border investment liberalisation over the years
 In May, the PBoC announced a plan to

For RMB clearing banks extend trading hours of the interbank FX
 Stock Connect daily limits quadrupled
Market and offshore participating
banks:  Offshore participation banks’ access to onshore
market
 In June, OIIs via the CIBM scheme and the
• Investment scope repo and interbank was allowed
Liberalization for was expanded to include  In May, MSCI included A-shares for the first time
Bond Connect were allowed to access the
exchange bond markets (previously only
repo QFI investors were allowed)
Foreign For foreign sovereign
Shenzhen –
 QFII & RQFII rules were harmonised with CIBM;
lock-up and repatriation restrictions were  In January, the PBoC issued Notice  In July, the PBoC, the SFC and the HKMA
entities1: removed; onshore FX hedging was allowed on cross-border RMB Business to announced to a plan to develop a new
Participation • Qualified commercial
Hong Kong
Stock Connect  Panda bonds issuance guideline was announced optimise and stablise foreign trade mutual access between Hong Kong and
banks (in addition to the was launched
and investments (Yin Fa No. 330 mainland China’s interest rate
 Three hurdles were cleared for Bloomberg- [2020]) swap/derivatives markets, or “Swap
PBoC) could serve as
• Investment Barclays Bond Index inclusion: DVP was enabled Connect”
settlement agents
for Bond Connect, electronic block trading, and  In September, Southbound Bond
 RQFII pilot scope was
• Application process expanded to tax for foreign investments were waived for three Connect was launched  In October, Hainan issued the first batch of
scheme was sustainability dim sum bonds by a mainland
launched in
simplified from approval include SZSE  Northbound years  In September, Cross-boundary
to registration listed stocks Bond Wealth Management Connect was Chinese provincial government worth
Hong Kong  In June, the PBoC released Notice 159 to allow RMB5bn
 QFIIs were • Investment scope Connect launched in the GBA area
and CIBM • Aggregate was overseas investors to conduct CNY spot and
was made allowed to expanded to include repo quota was launched derivatives with RMB overseas clearing and  In October, the initiation process of  In December, the SFC and the CSRC jointly
accessible to participate and China Interbank FX abandoned on participating banks for their participation in Bond Chinese bonds inclusion in FTSE announced in-principle approval for the
RQFIIs in CIBM Market (CIFXM) 3 July Connect, CIBM, RQFII, Stock Connect WGBI index started further expansion of eligible stocks under
the Stock Connect
1996- 2012 2014 2019 2020 2021

2011 2013 2015 2016 2017 2018 2022
2009
 QFII was  Foreign Shanghai –  In February, the PBoC released Notice [2016] No.3  In February, MSCI announced  In January, CIBM OIIs were allowed by SAFE to trade directly
launched in insurance Hong Kong regarding “Investment of Overseas Institutional it would increase China’s A- with no more than three domestic financial institutions and
2002 companies Stock Connect Investors in the Inter-bank Bond Market” share inclusion factor from 5% participate in CIFXM through Prime Brokage business.
 QDII was were given was launched  In May, the PBoC Shanghai issued the to 20%  In February, the connection between CFETS and Bloomberg
launched in access to • Southbound “Implementation Details on the Registration  In April, initiation process of was launched
2006 CIBM settled at CNH- Management of Overseas Institutional Investors Bloomberg-Barclays Bond
Investing in the Inter-bank Bond Market”; SAFE2  In February, the initiation process of JPM GBI bond index
 Interbank HKD rate Index inclusion started, inclusion started
issued the “Notice on Issues Concerning Foreign adding 0.3% each month over
bond market • Northbound Exchange Administration for Overseas Institutional  In June, QFII/RQFII quota limits were abolished; FII could
(CIBM) was used offshore 20 months
Investors Investing in the Inter-bank Bond Market”: choose to inject FCY and RMB for fund their investment
launched in RMB to invest in  In June, the CSRC officially
2010 onshore – Eligible institutions were expanded to all financial announced the opening of  In July, the PBoC and CSRC jointly released Notice [2020]
institutions and other medium- to long-term Sci-Tech Innovation Board No.7 to connect the infrastructure of the CIBM and exchange-
• No investors trade bond markets
repatriation or (“SSE Star Market”) in SSE
lock-up period – Quota approval was waived at individual level  In June, FTSE Russell started  In August, CFETS launched the pilot direct trading service for
– Application shifted from approval to registration the inclusion of A-shares In FII under CIBM Direct
– It laid out the eligibility and responsibility of the September, JP Morgan GBI-  In August, ChiNext Board adopted the IPO registration
settlement agents, who might take on the EM index announced China mechanism
custodian role bond inclusion to take place in  In September, cash bond trading hours were extended from
February-November 2020 1700 to 2000 local time, and non-standard settlement cycle
– Investment scope was expanded to repo, bond
lending, bond forwards, IRS and FRAs and other  In Sept, SAFE decided to T+N (N≥4) is available to offshore investors
trading instruments for hedging purpose only abolish the investment quotas  In November, a new QFI regime (QFII and RQFII are
for QFII and RQFIIs collectively referred to as QFI) went into force
PUBLIC
Note: 1. Referring specifically to foreign central banks, monetary authorities, international financial organizations and sovereign wealth funds. 2. Repo is only available to foreign central banks, monetary authorities, international financial organizations and sovereign wealth funds, RMB clearing banks and offshore participating banks
Source: HSBC
January 2023

January 2023
Table 1: Inbound investment channels

QFI CIBM
Eligible investors Foreign fund management institutions, commercial banks, insurance Financial institutions (FIs), including commercial banks, insurance,
companies, securities companies, futures companies, trust companies, securities companies, asset managers; products launched by these FIs;
government investment management companies, sovereign funds, Other eligible institutions: other medium-term and long-term institutional
pension funds, charity funds, endowment funds, international investors accepted by the PBoC, such as pension funds, charity funds
organisations and other institutions recognised by the CSRC and endowment funds, etc., Qualified Foreign Investor (QFI), foreign
central banks, international organisations and sovereign wealth funds
Applicable products - Stocks, depositary receipts, bonds, bond repurchases, and asset- - Cash bond, bond IPO and interbank deposit
backed securities on stock exchanges - Bond lending & borrowing, Bond forward, Forward Rate Agreement
- Eligible products and derivatives on bonds, interest rates and foreign (FRA), Interest Rate Swap (IRS) (For Overseas Institutional Investors’
exchange traded on the interbank bond market hedging purpose only, while no restriction for central bank-type
- Publicly offered securities investment funds investors)
- Financial futures on the CFFEX - For central bank-type investors, overseas RMB clearing banks and
- Bond repo on the stock exchanges participating banks repo is allowed to be traded
- Stocks listed in National Equities Exchange and Quotations (NEEQ,
“The New Third Board”)
- Commodity futures on futures exchange approved by the CSRC
- Options on exchanges approved by the State Council or the CSRC
- Eligible foreign exchange derivatives traded for hedging purposes
- New share issuance, bond issuance, asset-backed securities issuance,
secondary share offerings and rights issues
- Margin trading and securities financing in stock exchanges, and
securities lending to securities finance company
- Private investment funds. The underlying assets shall conform to the
eligible investment scope of QFI
- Other financial instruments as approved by CSRC
Source of funds Foreign currency and/or RMB Foreign currency (converted at the offshore CNH rate, or at the onshore
CNY rate with offshore RMB participating banks or onshore FX banks);
or offshore RMB
FX hedging rule Wide scope of FX tools available, including spot, forwards, swaps, Sovereign entities: wide scope of FX products available in the China
options, CCS but for securities hedging only Interbank FX Market (CIFXM), including spot, forwards, swaps, options,
CCS without any restrictions
Non-sovereign entities: Offshore CNY FX hedging and onshore FX

derivatives are available. SAFE [2020] No. 2 – allows offshore investors
to execute CNY FX up to three onshore FX Banks on FX Forwards, FX
swap, Cross-currency swap and FX Options
Asset allocation ----------------- Restrictions removed ---------------- ------- 100% in interbank products -------
Foreign ownership limit 10% for individual foreign investor; 30% for all foreign investors ---------------- Not applicable ----------------
Repatriation and lock-up The lock-up period has been removed, daily repatriation is allowed; No lock-up period applied; if both CNH and FCY are injected for a
period monthly repatriation cap has been removed fund/product, the accumulative FCY repatriation shall not exceed 110%
of the accumulative injection. And the consultation paper Article 11 is
considering to further relax the above ratio to 120% (not effective yet)
Investment quota Quota abolished, effective from 6 June 2020 No limits
Market entry process CSRC approval required for licence; subsequent registration at the SAFE Sovereign entities: registration with the PBoC or via settlement agent
banks; account opening with market intermediaries
Non-sovereign entities: registration with the PBoC via settlement agent

banks; account opening with market intermediaries
Source: PBoC, State Administration of Foreign Exchange, China Securities Regulatory Commission, HSBC
25
January 2023
Table 2: Circular investment channels

Name Northbound Stock Connect Southbound Stock Connect Mutual Recognition of Funds
Eligible investors All Hong Kong and overseas institutional and Mainland institutional investors, those General investors for publicly offered
individual investors. Existing QFI licence holders individual investors who hold an aggregate funds in mainland China and offshore
may also invest via SHHKSC/SZHKSC (SSE/SZSE balance of not less than RMB500,000 in their markets
securities acquired via SHHKSC/SZHKSC are not securities and cash accounts
fungible with QFI assets)
Applicable products Shanghai-Hong Kong Stock Connect: Dual listed A- Shanghai-Hong Kong Stock Connect: A- and General equity funds, bond funds,
and H-shares, constituent stocks of the SSE 180 H-shares, constituent stocks of the Hang Seng mixed funds, unlisted index funds,
Index and the SSE 380 Index (Exclusions: SSE- Large Cap Index and Mid Cap Index physical index-tracking exchange
listed shares, which are not traded in RMB; SSE- traded funds
listed shares, which are included in the ‘risk alert Shenzhen-Hong Kong Stock Connect: A- and
board’) H-shares, constituent stocks of the Hang Seng Financial derivatives are allowed for
Large Cap Index and Mid Cap Index, H-shares hedging purposes in mainland China;
Shenzhen-Hong Kong Stock Connect: Dual listed in the Hang Seng Small Cap Index with a for Hong Kong funds, the same is
A- and H-shares, constituents of the SZSE market capitalisation not less than HKD5bn2 allowed, if the relevant requirements
Component Index and SZSE, Small/Mid Cap are met
Innovation Index with a market capitalisation of at
least RMB6bn (Exclusions: SZSE-listed shares, Funds engaged in securities lending
which are not traded in RMB; SZSE-listed shares, and/or repo are eligible for the MRF
which are under ‘risk alert’)1
Shares listed on the ChiNext Board of the SZSE

available only to professional institutional investors
Source of funds RMB, USD, HKD Onshore RMB (flows to offshore and converted Offshore RMB/onshore RMB
at the CNH-HKD rate) (converted at the CNH-HKD rate)
Asset allocation Not applicable Not applicable Fund must not invest more than 20% of
its assets in the host jurisdiction market
Foreign ownership limit Single owner declarable at 5%, maximum single No restrictions Cross-border investor assets limited to
owner limit of 10% across A, H & ADR/GDR; 50% of total assets
Total Foreign limit set at 30% (HKEX will issue
warning at 26% and stop buy orders at 28%)
Repatriation and lock-up No restrictions No restrictions No restrictions
period
Investment quota No aggregate quota; daily limit RMB52bn Annual quota removed; daily limit RMB42bn Overall RMB300bn quota in each
direction; the SAFE will centrally
monitor the quota utilisation; no fund-
level quota
Source: Hong Kong Stock Exchange, PBoC, State Administration of Foreign Exchange, China Securities Regulatory Commission, HKMA, HSBC
1 The SFC and the CSRC jointly announced on 19 December 2022 their in-principle approval for the further expansion of eligible stocks under Mainland-Hong Kong Stock Connect. After the expansion, Stock Connect is expected to
include stocks that account for more than 80% of the equity trading in each market. The preparation will take approximately three months. Implementation details, as well as the official launch date, will be announced by stock
exchanges in due course. Northbound Stock Connect will include constituent stocks of the SSE A Share Index and the SZSE Composite Index, which have a market capitalisation of RMB5 billion or above and meet certain liquidity
criteria, etc.; SSE/SZSE-listed stocks of companies, which have issued both A shares and H shares remain in-scope.
2 Under the new announcement, the Southbound Stock Connect will include stocks of foreign companies primary-listed in Hong Kong, which are constituents of Hang Seng Composite Indices and meet relevant criteria (i.e.
constituents of the Hang Seng Composite Large Cap Index and Hang Seng Composite Mid Cap Index, and constituents of the Hang Seng Composite Small Cap Index with a market capitalisation of HKD5 billion or above). In addition,
the scope of the stocks eligible for the southbound trading under Shanghai-Hong Kong Stock Connect will be aligned with that under Shenzhen-Hong Kong Stock Connect.
26
January 2023
Table 2: Circular investment channels (continued)

Name Northbound Bond Connect Southbound Bond Connect Northbound Wealth Connect Southbound Wealth Connect
Eligible investors Financial institutions (FIs), Qualified domestic institutional - Hong Kong Identity Card holders (both
Eligible residents of the nine
including commercial banks, investors (QDII and RQDII) permanent and non-permanent residents;
mainland cities in the GBA;
insurance, securities companies, - Invest in their personal capacity
- At least two years of investment
asset managers; products - Not a vulnerable customer experience
launched by these FIs; other - Account opening with mainland partner
- A minimum of household financial
eligible institutions: other medium- banks only in person at the moment
assets of RMB2m or hold at least
term and long-term institutional RMB1m of net assets in the past
investors accepted by the PBoC, three months
such as pension funds, charity - Invest in their personal capacity
funds and endowment funds, etc., - Not a vulnerable customer
Qualified Foreign Investor (QFI), - Customers can open dedicated
foreign central banks, international investment accounts with Hong
organisations and sovereign Kong banks via either: (i) by
wealth funds attestation, i.e. the verification and
signing of client agreement to be
certified by the mainland partner
bank; or (ii) in person
Applicable products - Cash bonds. The permissible Due to technical constraints, - Public fixed income wealth management - Investment products (excluding
bonds are all types of bonds only HKD and CNY bonds can and equity wealth management products listed products traded and settled on
traded in the CIBM be traded in the initial phase of issued by mainland wealth management the HKEX) assessed as low- to
- Investors can participate in the scheme, but a system firms and being assessed by the issuers medium-risk and non-complex: 1)
primary market issuance upgrade will eventually broaden as products with risk rating of “R1” to “R3” Hong Kong-domiciled funds
the investment scope to bonds (excluding wealth management products authorised by the SFC; 2) Bonds; 3)
denominated in all currencies for the purpose of cash management); Deposits: RMB, HKD and foreign
- Public securities investment funds currency deposits.
(excluding listed funds) with risk rating of
“R1” to “R3”
Source of funds Foreign currency (converted at the Onshore RMB (flows to Foreign currency (converted into RMB in Onshore RMB (flows to offshore and
offshore CNH rate, or at the offshore and converted at the Hong Kong), or offshore RMB converted at the CNH-HKD rate)
onshore CNY rate with settlement CNH-HKD rate)
banks in Hong Kong or with
offshore RMB participating banks);
or offshore RMB
FX hedging rule Wide scope of FX tools available
including spot, forwards, swaps,
options, CCS but for bond hedging
only, and conducted through
‘CFETS Direct members’ in Hong
Kong
Repatriation and lock No lock-up period applied; zero
up period balance to be maintained onshore,
surplus RMB will be repatriated to
Hong Kong automatically on a
daily basis
Investment quota No limits Annual quota of RMB500bn, Aggregate quota RMB150bn for both schemes, individual quota RMB1m
daily quota of RMB20bn
Source: Hong Kong Stock Exchange, PBoC, State Administration of Foreign Exchange, China Securities Regulatory Commission, HKMA, HSBC
Table 3: Outbound investment channels

Name QDII QDLP/QDIE
Applicable participants Domestic banks, fund management companies, securities For QDLP: overseas fund managers’ mainland China subsidiary to launch
companies, insurance companies and trust companies QDLP fund, PE fund, real estate fund, FOF and traditional fund
For QDIE: Qualified Domestic Investment Enterprises can invest overseas
Source of funding Onshore RMB (converted to foreign currency at onshore rates) or Onshore RMB within the QDLP or QDIE quota
domestically sourced foreign currency within the QDII quota
Available instruments Traditional asset class, fund or derivatives under the QDII regime For QDLP: overseas master fund (can be global traditional asset class or
alternative investment fund)
For QDIE: offshore assets, including those in the capital market and also PE,
HF, real estate, etc.
Investment limits Total limited undisclosed (USD154bn approved as of November As of September 2020, the total quota size for Shanghai’s QDLP scheme is
2021) USD5bn; the total quota size for Shenzhen’s QDIE scheme is USD5bn
Source: PBoC, State Administration of Foreign Exchange, China Securities Regulatory Commission, HSBC
27
January 2023
Liquidity, risk management rules and market infrastructure

 In 2011, the PBoC announced the launch of the RMB Fiduciary Account Scheme, which
allows participating banks to better manage their credit exposure to the clearing bank.
 In 2011, Bank of China (Hong Kong), the clearing bank, launched a RMB repo facility,
which allowed participating banks to facilitate their intra-day liquidity management in the
RMB Settlement System.
 The Treasury Market Association of Hong Kong started publishing daily interbank RMB
lending rates (RMB HIBOR) on 3 January 2012. The number of banks quoting RMB HIBOR
has since increased to 13.
 In June 2012, the HKMA introduced the RMB Liquidity Facility to provide RMB liquidity to
participating banks in Hong Kong to address short-term RMB liquidity tightness, which may
arise from time to time. This has been enhanced a number of times, for example, in
November 2014, ahead of the Shanghai-Hong Kong Stock Connect. Further improvements
were most recently made on 27 October 2016.
 Currently, participating authorised institutions in Hong Kong can obtain intra-day

funding and overnight RMB funding available on the same day. One-day and one-week
RMB funding is available on the next day under the HKMA’s facility.
 The HKMA will use its own source of RMB to provide such lending, as well as
continuing to make use of the swap agreement with the PBoC in providing such funds.
 Funds with different tenors are each available up to RMB10bn in total on a single day.
 The HKMA charges a market rate-based fee for the use of all the aforementioned
facilities. For example, the intra-day borrowing cost is the average of the overnight CNH
HIBOR fixings in the three most recent days, and the overnight borrowing cost adds an
additional 50bp.
 Eligible collateral includes EFBN, HKGB, MOF and policy bank dim sum bonds with
various haircuts.
 The HKMA designates a number of banks active in the CNH market as primary liquidity
providers (PLPs). The HKMA offers a RMB2bn repo line to each of the PLPs, which
can be used for intra-day or overnight liquidity management purposes.
 In October 2016, the number of PLP banks was increased from seven to nine.
 Also, with effect from 1 November 2016 the usage of PLPs will be released to the
market four times daily, at 0900 HKT, 1100 HKT, 1400 HKT and 1600 HKT. Updates
will be provided on the HKMA’s website and Refinitiv page HKMAOOF.
 The HKMA replaced the RMB risk management limit with a RMB liquidity ratio for
monitoring banks’ RMB liquidity position in June 2012. The adjustment provides more
flexibility for the inclusion of more RMB liquid assets and facilitates more accurate matching
of maturity of RMB liquid assets and short-term liabilities.
 In April 2013, conditions regarding the applications of RMB liquefiable assets for the calculation
of the statutory liquidity ratio were removed, as were the requirement on the RMB liquidity ratio
and limits on RMB net open positions. The HKMA expects banks to apply equal treatment to
offshore RMB and other currencies in respect of liquidity risk management.
28
January 2023
 Since 25 June 2012, the operating hours of the RMB Real Time Gross Settlement (RTGS)
system were extended from 0830-1830 HKT to 0830-2330 HKT, giving financial institutions
in the European time zone an extended window to settle offshore RMB payments through
the Hong Kong infrastructure.
 Offshore clearing banks were allowed to deploy and borrow funds more efficiently onshore
and offshore under the PBoC’s Notice 168 introduced in July 2013. Under this rule, offshore
banks can transfer RMB funds between their onshore and offshore RMB nostro accounts or
between two onshore RMB nostro accounts for settlement purposes, including transactions
for the need of funding arrangements. Previously, offshore banks could only transfer funds
between their onshore and offshore nostro accounts for trade settlement purposes.
 Starting June 2015, the clearing banks and offshore participating banks had been allowed
to access the onshore interbank repo market using RMB acquired in the China Interbank
Bond Market (CIBM) as collateral. Repo funds were allowed to be repatriated offshore.
 Mainland China launched the Cross-border Interbank Payment System (CIPS) in October
2015. Designed as an upgrade from the previous routing mechanism through various
clearing banks, the CIPS is a streamlined clearing settlement platform that connects global
RMB users in one single system.
 On 18 January 2016, the PBoC announced it will impose normal reserve requirements
(of 15.5-17% from 0% previously) on offshore RMB deposits placed in mainland China. The
new rule became effective on 25 January 2016 and was applied to the CNH deposit balance
placed onshore as at end-December 2015. The deposits affected include: (i) offshore
participating banks’ CNH deposits placed with onshore correspondent banks; (ii) CNH
deposits from Bank of China (Hong Kong) and Bank of China (Macau) with the PBoC,
Shenzhen and Zhuhai; and (iii) other offshore clearing banks’ CNH deposits placed with their
onshore parent banks. The definition of offshore participant banks excludes foreign central
banks and other official reserve management institutions, international financial organisations,
and sovereign funds. The reserve requirements were lifted in September 2017.
 In May 2020, the PBoC announced that, starting from 1 January 2021, all cross-border RMB
payments will be cleared via the CIPS centrally. The China National Automated Payment
System (CNAPS) will no longer be used for cross-border RMB clearing.
Offshore RMB centres and RMB FX swap agreements
Offshore RMB centres have been rolled out in a number of locations, see Table 4 for details.
Offshore RMB is largely fungible across different offshore centres, although interest rates could
vary slightly due to differences in RMB clearance mechanisms, RMB liquidity pool compositions,
credit ratings of local clearance banks, and participant banks’ and investors’ risk appetite.
The PBoC also has signed various bilateral local currency swap agreements with other
countries to facilitate trade and financial transactions.
Free Trade Zone (SFTZ)

In May 2014, the PBoC, Shanghai, issued the implementation details on free trade accounts (FTA)
opened in the Shanghai Free Trade Zone (SFTZ), which allow RMB transactions for current account
business, foreign direct investments and cross-border lending. This essentially makes the SFTZ and
potentially other free trade zones function as the offshore RMB centres inside mainland China.
On 30 October 2015, the PBoC and other regulators announced that the SFTZ will start to
experiment with capital account convertibility. FX and rates in the SFTZ are in line with offshore
RMB markets.
29
January 2023
Table 4: Offshore RMB centres and RMB FX swap agreements

Offshore RMB centre Local clearing Clearing platform Customer deposits FX swap with central bank Direct currency trading
Hong Kong Dec 2003 BoC Hong Kong RMB892.29bn (Jan 2023) RMB800bn (Jul 2022) HKD-RMB
Macau Sep 2004 BoC Macau MOP44.1bn (Oct 2017) RMB30bn (Dec 2019)
Taipei, Taiwan Dec 2012 BoC Taipei RMB203.02bn (Jan 2023)
Singapore Feb 2013 ICBC Singapore RMB174bn (Dec 2022) RMB300bn (Mar 2019) SGD-RMB (Oct 2014)
Seoul, South Korea Jul 2014 BoCom Seoul RMB11bn (Jan 2023) RMB400bn (Oct 2020) KRW-RMB (Jun 2016)
London, UK Jun 2014 CCB London RMB81.3bn (Dec 2021) RMB350bn (Nov 2021) GBP-RMB (Jun 2014)
Frankfurt, Germany Jun 2014 BoC Frankfurt RMB21bn (Mar 2014) RMB350bn via ECB (Oct 2019) EUR-RMB (Sep 2014)
Paris, France Sep 2014 BoC Paris RMB25bn (Apr 2015) RMB350bn via ECB (Oct 2019) EUR-RMB (Sep 2014)
Luxembourg Sep 2014 ICBC Luxemburg RMB73bn (Apr 2015) RMB350bn via ECB (Oct 2019) EUR-RMB (Sep 2014)
Doha, Qatar Nov 2014 ICBC Doha RMB35bn (Jan 2021) QAR-RMB
Toronto, Canada Nov 2014 ICBC Canada RMB200bn (Jan 2021) CAD-RMB (Nov 2011)
Sydney, Australia Nov 2014 BoC Sydney RMB200bn (Jul 2021) AUD-RMB (Nov 2011)
Bangkok, Thailand Jan 2015 ICBC Thailand RMB70bn (Jan 2021) THB-RMB
Kuala Lumpur, Malaysia Jan 2015 BoC Malaysia RMB180bn (Jul 2021) MYR-RMB (Aug 2010)
Santiago, Chile May 2015 CCB Santiago RMB22bn (Aug 2021) CLP-RMB
Indonesia RMB250bn (Jan 2022) IDR-RMB (MOU, Oct 2020)
Johannesburg, South Africa Jul 2015 BoC Johannesburg RMB30bn (Sep 2021) ZAR-RMB (Jun 2016)
Mongolia RMB5bn (May 2011)
Sri Lanka RMB10bn (Mar 2021) LKR-RMB
Chile RMB50bn (Jul 2020)
Buenos Aires, Argentina Sep 2015 ICBC Buenos Aires RMB130bn (Jul 2020)
Lusaka, Zambia Sep 2015 BoC Lusaka
Zurich, Switzerland Nov 2015 CCB Zurich RMB150bn (Jul 2017) CHF-RMB (Nov 2015)
New York City, USA Sep 2016 BoC NYC
JP Morgan Chase Bank
Pakistan RMB30bn (Jul 2021) PKR-RMB
Ukraine RMB15bn (Jun 2012)
Dubai, UAE Dec 2016 ABC Dubai RMB35bn (Dec 2015) AED-RMB (Sep 2016)
Budapest, Hungary Jun 2015 BoC Budapest RMB10bn (Sep 2016)
Brazil RMB190bn (Mar 2013)
Moscow, Russia Sep 2016 ICBC Moscow RMB150bn (Oct 2017) RUB-RMB
Albania RMB2bn (Sep 2013)
Serbia RMB1.5bn (Jun 2016)
New Zealand RMB25bn (May 2017) NZD-RMB (Mar 2014))
Tajikistan RMB3bn (Sep 2015)
Morocco RMB10bn (May 2016)
Suriname RMB1bn (Mar 2015)
Armenia RMB1bn (Mar 2015)
Egypt RMB18bn (Dec 2016)
Iceland RMB3.5bn (Jun 2010)
Kazakhstan RMB7bn (Jun 2011)
Uzbekistan RMB0.7bn (Apr 2011)
Belarus RMB20bn (Mar 2009)
Nigeria RMB15bn (Jun 2021) NGN-RMB
Turkey RMB35bn (Jun 2021) TRY-RMB
Albania RMB2bn (Sep 2013)
Japan Oct 2018 BoC Tokyo RMB200bn (Oct 2021) JPY-RMB (Jun 2012)
MUFG Bank
Source: PBoC, HSBC
30
January 2023
Bangladeshi taka (BDT)
 Bangladesh Bank (BB) operates a managed floating regime with

close monitoring
 There is no NDF market for the BDT and the currency is convertible
only for current account transactions
 The market is closed on Friday and Saturday
Normal Market Conditions Spot

Onshore average An active and deep two-way market in USD-BDT has yet to develop. There is also limited
USD3-10m
daily spot volume: activity in other FCY-BDT pairs. While there are no restrictions for interbank participants to
Onshore spot
USD2-5m transact in the BDT against foreign currencies, corporate and individual customers can transact
transaction:
Onshore spot only for underlying commercial transactions with authorised dealers. Bangladesh Bank (the
bid/ask spread: (0.05-0.10BDT) central bank of Bangladesh) issues licences to scheduled banks to deal in foreign exchange.
Onshore average
USD80-120m There are no brokers in the market, and most deals are done over the phone or Refinitiv
daily swap volume:
Onshore forward Dealing System on a bilateral negotiated basis.
USD1-2m
transaction:
Onshore forward Forwards/FX swaps
(0.15-0.10BDT)
bid/ask spread:
While there is an active FX swap market, most activity is in short-dated tenors. Most volumes
developments are transacted within one week and are used for the main purpose of funding by banks. FX
Source: Internal market estimates, HSBC
forwards, which need to be backed by genuine underlying transactions, are traded more often
by corporate entities. These are usually for three- to six-month tenors, but longer tenors of up to
one year are also transacted on a selective and limited basis.
All forward contracts should be treated as firm. Forward contracts can be rolled over/renewed
for a new delivery period at the prevailing market rate.
The only yield curve to indicate a term structure of interest rates is the Treasury yield curve,
which is not always reflective of the actual market. There was an attempt in early 2010 to reflect
market rates by introducing the DIBOR (Dhaka Interbank Offer Rate), which can be viewed on
Refinitiv page DIBR. However, this does not meaningfully reflect the market rates, and we are
unaware of any of these rates being used as transaction benchmarks.
Options
The central bank has eased its stance to allow BDT vanilla FX options to facilitate the hedging of
underlying exposures. However, prior regulatory approval is required for any derivatives structures.
31
January 2023
Note: Times given are Dhaka local time = GMT + 6 hours
Source: HSBC
FX framework
2023 Holiday Calendar Exchange rate mechanism

21 Feb Shahid Day and Exchange rates of the BDT for inter-bank and customer transactions are set by the dealer banks,
International Mother based on demand-supply interaction. Bangladesh Bank (BB) undertakes USD purchase or sale
Language Day
8 Mar Shab-e-Barat*
transactions with dealer banks as and when needed to maintain orderly market conditions.
17 Mar Birthday of the Father of
the Nation Bangabandhu
Background
Sheikh Mujibur Rahman  BB is the primary regulator for the overall banking industry. Broadly, its objectives are to
26 Mar Independence and keep prices and the exchange rate stable, maintain exchange rate competitiveness, drive
National Day
14 Apr Bengali New Year’s Day
monetary policy to preserve macroeconomic stability, and promote growth in agricultural
19 Apr Shab-e-Qadr* and other priority sectors.
21 Apr Jumat-ul-Wida
 BB closely monitors the stability of the BDT exchange rate to maintain a healthy level of FX
21-23 Apr Eid-ul-Fitr*
1 May May Day reserves and manage the monetary and credit system with a view to maintaining low inflation.
4 May Buddha Purnima*
(Boishakhi Purnima)  In May 2003, the BDT exchange rate was declared as floating when the band of the central
28-30 Jun Eid-ul-Azha* bank’s USD buying and selling rates was withdrawn. However, the IMF usually classifies
1 Jul Bank Holiday
the de facto arrangement as “stabilised arrangement”, or “crawl-like arrangement” or “other
29 Jul Ashura*
15 Aug National Mourning Day managed arrangement”.
6 Sept Janmashtami
28 Sept Eid-e-Miladun-Nabi*
24 Oct Durga Puja (Bijoya Repatriation and other regulations
Dashami)
16 Dec Victory Day
25 Dec Christmas Day Regulations
31 Dec Bank Holiday
Onshore-onshore
Source: Bangladesh Bank DOS Circular letter no –
36/2022  Onshore entities can engage in both spot and forward transactions for valid underlying
*Subject to the appearance of the moon.
commercial transactions. Supporting documentation is required, e.g. sales contracts and
LCs, prior to booking any forward transaction.
Bangladesh Investment  Banks can extend local currency working capital finance or local currency term loans to
Development Authority (BIDA)
bida.gov.bd foreign-owned/controlled companies operating in Bangladesh.
Ministry of Finance
www.mof.gov.bd Offshore-onshore
Dhaka Stock Exchange  Offshore counterparties can buy BDT but are not allowed to sell BDT freely to purchase
www.dsebd.org foreign currency.
Central Bank of Bangladesh
www.bb.org.bd/  Non-residents can invest in securities listed on the local stock exchanges and government
Bangladesh Export Processing
securities with foreign exchange brought in from overseas. This can be achieved by
Zones Authority
www.bepa.gov.bd opening a non-resident investor’s taka account (NITA) with any Authorised Dealer Bank.
Bangladesh Economic Zones
Authority  An investor can buy/sell foreign currency using a NITA to purchase and sell securities.
www.beza.gov.bd Cash related to securities transactions (i.e. purchases, sales, and income) must be routed
HSBC Refinitiv Dealing page
through this account after ensuring the appropriate tax has been deducted. Plain cash
HSDK
payments from a NITA are currently not allowed.
 Travellers can bring in up to USD10,000 (or the equivalent in another currency) without
declaration.
32
January 2023
Onshore-offshore
 100% foreign-owned industrial enterprises and joint venture industrial enterprises located in
export processing zones may borrow freely in foreign currency from local banks, as well as
from abroad without prior approval from the central bank.
Offshore-offshore
 There is no offshore market for the BDT.
Repatriation
 Neither the remittance of non-residents’ income from investments in Bangladesh, nor the
remittance of dividends declared from previous years’ accumulated reserves require prior
central bank approval.
33
January 2023
Hong Kong dollar (HKD)
 The Hong Kong Monetary Authority (HKMA) maintains a currency

board system that requires Hong Kong’s monetary base to be fully
backed by foreign reserves
 The HKD is a freely tradable and convertible currency linked to
the USD
 Since May 2005, the HKMA has committed to buy USD-HKD at 7.75
and sell at 7.85
Normal Market Conditions The following suite of products is available:

Average daily
USD4-5bn  Spot FX
spot volume:
Spot transaction: USD10m  FX forwards out to 10 years
Spot bid/ask 1-2 pips
spread: (0.0001-0.0002HKD)  FX options out to five years and further tenors on a case-by-case basis
Average daily
USD10-13bn
forward volume:  Cross-currency swaps out to 10 years
Forward
USD50m
transaction:  Interest rate swaps, local bonds and money market products
1M-3M: 1-3pips
(0.0001-0.0003HKD) Spot
Forward spread:
6M-12M: 3-8 pips
(0.0003-0.0008HKD) The HKD is a freely tradable and convertible currency linked to the USD. USD-HKD trades
Average daily within a band of 7.75-7.85.
USD2-3bn
options volume:
Average options Forwards/FX swaps
USD100m
transaction:
The forwards market is reasonably liquid. Estimated daily turnover is roughly USD13-15bn. Normal
Implied option
3M: 0.2 vol transactions are around USD50m, although much larger transactions are not uncommon in shorter
volatility spread:
Note: Spreads are subject to change with market tenors. There are no restrictions on trading between onshore and offshore.
developments.
Source: HSBC
Options
The options market is reasonably liquid with daily volume averaging USD1bn. FX options are
commonly available out to five years with longer expirations available upon request. The normal
size of a transaction is around USD100m.
Currency swaps and bonds

Hong Kong’s swaps markets are well-developed and offer excellent liquidity. There is also a
range of local sovereign and corporate debt products available.
34
January 2023
Note: Times given are Hong Kong local time = GMT + 8 hours
Source: HSBC
2023 Holiday Calendar FX framework

2 Jan New Year’s Day
23-25 Lunar New Year Background
Jan
 Hong Kong switched to a fixed exchange rate against the USD (from the GBP) in July 1972.
5 Apr Ching Ming Festival
7-8 Apr Good Friday & Day after The official rate of the HKD was USD1 to HKD5.085.
Good Friday
 Between 1974 and 1983, a floating exchange rate regime was in place. The HKD
1 May Labour Day depreciated sharply against the USD.
26 May Buddha’s Birthday  In October 1983, Hong Kong re-established a link of the HKD to the USD. Hong Kong’s
22 Jun Tuen Ng Festival Linked Exchange Rate System (LERS) is a currency board system. The exchange rate was
1 Jul SAR Establishment Day
fixed at USD1 to HKD7.80.
30 Sep Day after Mid-Autumn
Festival  The Hong Kong Monetary Authority (HKMA) was established in 1993 by merging the Office
2 Oct National Day holiday
of the Exchange Fund and the Office of the Commissioner of Banking. The HKMA has four
23 Oct Chung Yeung Festival
functions: maintain currency stability within the framework of the LERS, managing the
25 Dec Christmas
Exchange Fund, promoting the stability and integrity of the financial system, and developing
26 Dec Day after Christmas
Source: Government of Hong Kong, HSBC
Hong Kong as an international financial services centre.
Additional Information  The Exchange Fund is a fund used primarily for “affecting, either directly or indirectly,
The Hong Kong Monetary Authority the exchange value of the currency of Hong Kong” (Exchange Fund Ordinance). It may
www.info.gov.hk/hkma also be used to maintain financial stability. It is under the control of the Financial
Invest Hong Kong
www.investhk.gov.hk Secretary but managed by the HKMA. The government began to transfer its fiscal
reserves to the Exchange Fund in 1976 and, since 1998, the bulk of those fiscal
reserves has been invested in foreign assets to increase their investment return and to
strengthen the HKMA’s ability to maintain the stability of the HKD.
 Three refinements were made to the operation of the LERS in May 2005. The HKMA
introduced a strong-side Convertibility Undertaking to buy USD from licensed banks at 7.75
and announced the shifting of the existing weak-side Convertibility Undertaking from 7.80 to
7.85, so as to achieve symmetry around the Linked Exchange Rate of HKD7.80.

 The Linked Exchange Rate System (LERS) is a form of currency board system adopted
in Hong Kong on 17 October 1983. There are two key principles of the currency board
system – the Monetary Rule and the automatic interest rate adjustment mechanism.
 The Monetary Rule requires that any change in the monetary base is fully matched by
a corresponding change in foreign currency reserves at a fixed exchange rate.
 There are three components of the monetary base in Hong Kong: 1) currency in
circulation; 2) clearing account balances banks keep with the HKMA (the “Aggregate
Balance”); and 3) exchange fund bills and notes (EFBN) issued by the HKMA. As of
December 2022, the monetary base was HKD1,916bn, comprising HKD606bn of
Certificates of Indebtedness (notes in circulation), HKD13bn of coins in circulation,
HKD96bn of Aggregate Balance and HKD1,201bn of outstanding EFBN.
35
January 2023
 Interpreting the Monetary Rule at its strictest would require Hong Kong’s authorities to
maintain a level of foreign currency reserves that 100% covers the monetary base. As
of November 2022, the Exchange Fund held HKD3,857bn worth of foreign assets,
which covered 204% of the monetary base. The HKMA has ample FX reserves to
maintain the LERS.
 Under a currency board system, exchange rate stability is maintained via an

automatic adjustment mechanism involving the rise and fall of interest rates.
When there are large capital inflows (outflows), banks sell USD to the HKMA for
HKD (buy USD from the HKMA using HKD), causing the Aggregate Balance and,
as such, the monetary base to expand (contract). This causes interest rates to fall
(rise), thereby creating disincentives for capital inflows (outflows) to persist.
Pressures on the exchange rate are, therefore, alleviated.
 Since October 1983, the Linked Rate of Hong Kong’s currency board system has been set
at HKD7.80 to one USD. When banks issue (withdraw) HKD notes, they submit (receive)
an equivalent amount of USD at the Linked Rate of HKD7.80 to one USD to (from) the
HKMA in exchange for Certificates of Indebtedness.
 After May 2005, the LERS has been refined into an exchange rate target zone regime from
a single fixed rate regime. In addition to the Linked Rate of HKD7.80 to one USD, which
applies to Certificates of Indebtedness, there are two other important USD-HKD exchange
rate levels that form a Convertibility Zone of HKD7.75-7.85/USD that applies to the
Aggregate Balance.
 The HKMA has a standing commitment to buy any amount of USD that licensed banks
in Hong Kong wish to sell to it, by crediting their clearing accounts with HKD (therefore,
increasing the Aggregate Balance) at the rate of HKD7.75 to one USD. This is known
as the strong-side Convertibility Undertaking.
 Symmetrically, the HKMA also has a commitment to sell any amount of USD to banks, by
debiting their HKD clearing accounts (therefore, decreasing the Aggregate Balance) at the
rate of HKD7.85 to one USD. This is known as the weak-side Convertibility Undertaking.
 The triggering of either Convertibility Undertaking is passive, that is, initiated by banks.
Even if USD-HKD is trading at 7.75 or 7.85, the Convertibility Undertaking may not
necessarily be triggered as banks may be buying and selling HKD at those levels
among themselves.
 The HKMA can conduct foreign exchange intervention within the Convertibility Zone;
however, such actions have been rare. The HKMA said it last did so in mid-2005 to
smooth out interest rate volatility induced by an IPO. The HKMA believes that
discretionary actions undermine the credibility of the LERS.
 The Aggregate Balance refers to the sum of the balances in the clearing accounts
maintained by banks with the HKMA for settling interbank payments and payments between
banks and the HKMA. There is no interest paid on clearing account balances.
 The Aggregate Balance is an indicator of the level of interbank liquidity. It represents

the aggregate source of funds in the interbank market for banks to readily lend to and
borrow from each other amongst themselves. It is, as such, an important factor that
determines interbank borrowing rates (HIBOR). The lower the Aggregate Balance, the
higher the interbank borrowing rate ought to be.
36
January 2023
 The closing or end-of-day Aggregate Balance changes only under three circumstances:
1) when the HKMA buys or sells USD due to the triggering of the Convertibility
Undertakings; 2) when the HKMA redeems or issues EFBN; and 3) when banks borrow or
return overnight funds to the HKMA via the discount window. All of these actions would lead
to the HKMA crediting or debiting banks’ HKD clearing accounts in the process.
 The intra-day Aggregate Balance can exceed the opening or closing Aggregate
Balance. This is because of banks’ FX transactions with each other in the Real Time
Gross Settlement (RTGS) interbank payment system – a continuous settlement of
payments on an individual order basis without netting debits with credits across books –
during the day. The HKMA provides intra-day repo facilities to banks with EFBN as
collateral for the smooth running of the RTGS system. Therefore, the closing Aggregate
Balance can theoretically be close to zero and has, indeed, been only slightly above
zero for long periods of time in the past. Banks have held at least HKD50bn of EFBN
since the launch of the RTGS system in 1996.
Repatriation and other regulations
Regulations
 The government maintains no controls on the currency. There are no restrictions on:
 the repatriation of capital
 the remittance of profits
 borrowing from abroad
 non-residents borrowing locally
 residents or non-residents holding foreign currency in onshore accounts

 The HKD is freely tradable and convertible.
 Onshore spot, FX forwards and FX options markets are available to onshore and offshore
entities. The government makes no distinction between local and foreign companies.
 Both residents and non-residents are free to buy and sell securities and other instruments on
Hong Kong’s capital and money markets with no restrictions on the types of accounts available.
 There are no limits on repatriation. Cross-border remittances are readily permitted, and the
authorities do not require the disclosure of any related information.
HKD liquidity facilities for banks provided by the HKMA

 All liquidity shall be provided in ways consistent with the Linked Exchange Rate System,
which is underpinned by the Currency Board arrangements.
 There are two Settlement Facilities to facilitate the smooth operation of the interbank
payment system and preserve systemic stability.
 Intra-day Repo: The HKMA automatically provides interest-free intra-day liquidity to

banks against EFBN as collateral to facilitate interbank settlement under the RTGS
system. Intra-day loans that are not unwound by the end of the day become overnight
loans under the Discount Window.
 The Discount Window provides overnight funding to banks through repurchase

agreements involving EFBN (or other eligible paper) as collateral. The Discount Rate is
set at the base rate for the first 50% of the EFBN held by a bank, and set at the higher
of either the base rate plus 5%, or overnight HIBOR for the day, for the next 50% of the
EFBN held by a bank. The base rate is, in turn, set at 50bp above the lower end of
37
January 2023
prevailing target range for the US Fed Funds rate, or the five-day moving average of
the overnight and one-month HIBOR, whichever is higher. The HKMA announces the
Base Rate every day before the interbank market opens in Hong Kong.
 The HKMA also provides term liquidity – via term repo and FX swaps – to help banks
manage unexpected liquidity tightness. These are known as Standby Liquidity Facilities.
Liquidity is normally available at a term of up to one month and may be rolled over,
subject to re-pricing at maturity. The HKMA determines pricing at its discretion but with
reference to market rates. HKD liquidity is provided under these facilities against standard
collateral – USD, or other major currencies via a FX swap, and/or certain liquid securities
denominated in HKD, USD or other major currencies via a term repo.
 The Contingent Term Facility may be made available, on a case-by-case basis, at the
discretion of the HKMA to a bank facing extraordinary liquidity stress, which cannot be
overcome through other means (market funding, Settlement Facilities, Standby Liquidity
Facilities) and which can threaten financial systemic stability of Hong Kong. It is akin to a
Lender of Last Resort arrangement.
 The Resolution Facility is similar but made available (also on a case-by-case basis at the
discretion of the HKMA) only to a bank that has already gone into resolution in Hong Kong
for the purpose of ensuring that the bank has sufficient liquidity to meet its obligations.
There is no maximum limit on the amount of liquidity that may be made available under both
facilities, but there should be adequate collateral. A wide spectrum of collateral will be
considered by the HKMA, including standard collateral, residential mortgages and loans.
 The HKMA does not disclose information about usage of the HKD liquidity facilities, unless
exceptional circumstances pertain where there is a strong case for doing so to maintain
monetary and financial stability. However, should usage of the facilities result in an increase
in the Aggregate Balance, the amount of the increase will be reflected in the regular
updates of interbank liquidity.
Foreign currency liquidity facilities for banks provided by the HKMA

 The RMB Liquidity Facility was introduced in June 2012 to address potential short-term
liquidity tightness in the offshore RMB (CNH) market. Banks are welcome to use the RMB
Liquidity Facility to meet short-term funding needs. Currently, under the RMB Liquidity
Facility, banks may obtain from the HKMA: (i) overnight RMB funds available on the same
day; (ii) 1-day RMB funds available on the next day; (iii) 1-week RMB funds available on
the next day; and (iv) intraday RMB funds.
 In October 2014, the HKMA introduced the Primary Liquidity Providers (PLP) scheme.
The HKMA provides a dedicated repo facility of RMB2 billion to each of the nine
designated PLPs so as to facilitate their liquidity management when carrying out more
market-making and other business activities in the offshore RMB market. The PLPs can
obtain intraday or overnight RMB funds from the HKMA under the repo facility, which are
subject to the same terms and conditions as those of the RMB Liquidity Facility.
 On 22 April 2020, the HKMA introduced a temporary US Dollar Liquidity Facility. The facility
was then converted into a standing arrangement on 30 July 2021. A total of USD10 billion is
available to banks under the facility in the form of repurchase transactions for a term of seven
days through competitive tenders held by the HKMA every week. The minimum bid rate is
currently set at 0.25%, which aligns with the interest rate of the standing FIMA Repo Facility at
the US Federal Reserve. The HKMA will publish the tender schedule together with the total
allotted amount and relevant interest rates of each tender on its website.
38
January 2023
Indian rupee (INR)
 The Reserve Bank of India (RBI) said the INR trades in a floating
exchange rate arrangement
 The INR is convertible on the current account, but there are some
restrictions on the capital account
 The RBI monitors the INR’s nominal and real effective exchange rates
Normal Market Conditions

Onshore daily average
The following products are available:
USD12-15bn
spot volume:
 Spot FX
Average onshore spot
USD5m
transaction size:  Onshore deliverable FX forwards/swaps out to 10 years
Onshore spot bid/ask
1 pip (0.01INR)  Onshore money market instruments
spread:
Onshore daily average  Onshore interest rate swaps out to 10 years
USD5-6bn
forward volume:
Average onshore  Onshore options out to 10 years
forward transaction USD10m
size:  Onshore exchange-traded currency futures and options
Onshore forward Spot
1 pip (0.0INR)
spread:
The spot market is well-developed and liquid with a large number of participating private, foreign
Offshore daily average
USD5-7bn and state-run banks. The spot fixing rate is set by Financial Benchmarks of India Limited (FBIL)
NDF volume
Average NDF and available on Refinitiv (USDINRREF=FBIL) and Bloomberg (INRRATE).
USD10-20m
transaction size
Forwards
1-2 pips
NDF bid/ask spread: Onshore deliverable forwards are quoted up to 10 years. Onshore deliverable forwards can be
(0.02INR)
Onshore daily average
accessed by foreign institutional investors, corporates (residents and non-residents), and resident
USD250-350m
options volume: individuals, if these entities have an underlying exposure. Corporate entities can also hedge their
Onshore average currency risk for an anticipated exposure. The most common tenor with the best liquidity in the
USD20m
options transaction: forwards market is one year or less, but longer maturities are available and there is reasonable
Onshore implied liquidity up to 10 years. As per changes in guidelines released by the RBI, onshore banks are also
option volatility 3M: 0.5 vol
spread: now allowed to offer NDF to non-resident clients subject to certain regulations. Also, along with the
Offshore daily average changes in the hedging framework in terms of forwards, there has been liberalisation in terms of new
USD1.0bn
options volume products that can be offered to corporates based on the client classification framework.
Offshore average
USD50m Options
options transaction
Onshore, deliverable FX options out to 10 years are available. Longer tenors are available on a
Offshore implied
3M: 0.4 vol
option volatility spread case-by-case basis. As per the revised risk management guidelines, corporates are classified
Note: Spreads are subject to change with market as Retail and Non-Retail. Retail clients include companies with a net worth of less than INR5bn.
developments.
Source: HSBC Eligible option products for clients classified as Retail clients include the purchase of call and
put options and the purchase of call and put spreads. For the Non Retail clients, there are no
prescriptive products and they can deal in a wider range of the product suite (subject to certain
regulations being met).
39
January 2023
Note: Times given are Mumbai local time = GMT + 5.5 hours
Source: HSBC
2023 Holiday Calendar

FX framework
26 Jan Republic Day
18 Feb Maha Shivratri Exchange rate mechanism
19 Feb Chhatrapati Shivaji  The INR exchange rate is determined in the interbank foreign exchange market. FBIL
Maharaj Jayanti announces a daily reference rate for the INR against the USD, JPY, GBP and EUR.
7 Mar Holi
22 Mar Gushi Padwa  The RBI monitors the value of the INR against a basket of currencies. Various Nominal
30 Mar Ram Navami Effective Exchange Rates (NEERs) and Real Effective Exchange Rates (REERs) are
4 Apr Mahavir Jayanti published on a monthly basis.
7 Apr Good Friday
 Though there is a stated policy of allowing market moves based on underlying
14 Apr Ambedkar Jayanti
22 Apr Ramzam-Id fundamentals, the RBI can intervene in the foreign exchange market in cases of excessive
1 May Maharashtra din volatility, and/or to anchor expectations
5 May Buddha Purnima  The RBI intervenes using the spot market and the onshore FX swaps and futures markets.
28 Jun Bakri Id
29 Jul Moharum
Background
15 Aug Independence Day
 Exchange controls are established by both the government and the RBI as per The Foreign
16 Aug Parsi New Year
19 Sep Ganesh Chaturthi Exchange Management Act (FEMA) of 2000.
28 Sep Id-E-Milad  The INR is fully convertible on the current account, though there are some exchange
2 Oct Gandhi Jayanti
controls on capital account transactions.
24 Oct Dussehra
12-14 Diwali  All regulations with regards to the products allowed in the onshore markets are governed by
Nov the RBI and the Foreign Exchange Dealers’ Association of India (FEDAI).
27 Nov Guru Nanak Jayanti
25 Dec Christmas
Fixing mechanism
Source: FEDAI Calendar
 The market opens at 0900 Mumbai local time and closes at 1530 Mumbai local time (the
market does not close for lunch). It is open for non-interbank counterparties from 0900
Mumbai local time to 1530 Mumbai local time.
Reserve Bank of India
www.rbi.org.in  In a notification published on 6 January 20202, the RBI has allowed customer and interbank
Ministry of Finance
finmin.nic.in transactions beyond onshore market hours3. Authorised dealers may voluntarily undertake
The Associated Chambers of customer (person’s resident in India and person’s resident outside India) and interbank non-
Commerce and Industry of India cash transactions beyond onshore market hours. Transactions with person’s resident
www.assocham.org
Refinitiv Fixing Page outside India, through their foreign branches and subsidiaries, may also be undertaken
INRREF=RBIL beyond onshore market hours.
 Market liquidity is best between 0915 Mumbai local time and 1515 Mumbai local time.
2 https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11780&Mode=0
3 For details, see, Master Direction – Risk Management and Inter-Bank Dealings:
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/MD3191FD1C01B7704FB9B24E7073F651AB51.PDF
40
January 2023
 The INR fix is computed on the basis of the volume weighted average of the actual market
transactions that have taken place during a randomly selected 15-minute window between
1130 Mumbai local time and 1230 Mumbai local time every weekday two business days
prior to value date and is published around 1330 Mumbai local time on FBIL’s website and
is also available on Refinitiv and Bloomberg.
 To trade off the fix rate onshore, an order must be placed before 1115 Mumbai local time
on the fix date.
 ‘Mumbai cut’ options expire at 1130 Mumbai local time.
Regulations
We provide a brief summary of the applicable regulations in the onshore market below.
Spot
 Only ‘authorised dealers’ that are registered with the RBI can engage in the buying and
selling of INR against foreign currencies with the public. These positions are offset in the
interbank market.
 Market participants are able to buy INR freely from any bank for transactions approved
under The FEMA. Approval is not required for most current account transactions.
 Purchases of foreign currencies against the INR are allowed for current account
transactions, including repatriating profits from foreign-funded companies, as well as for
daily recurring transactions in the ordinary course of business (e.g. travelling).
 The INR is restricted on the capital account, but there are specific transactions that have been
authorised by the RBI for routine capital account transactions, e.g. investments by foreign
portfolio investors (FPIs). Other permitted capital account transactions include foreign direct
investment, foreign currency loans and bonds, securities and equity investments overseas.
 All cash/next day/spot transactions by authorised dealers on behalf of customers will be
undertaken for actual remittances/delivery only and should not be cancelled or cash settled.
Forwards and options

 Onshore (corporate) entities can access the local FX forwards market, provided these
contracts are used to cover genuine foreign exchange exposure. Documentary proof, such
as invoices or trade agreements, must be provided to the authorised dealer within 15
calendar days (for forwards booked under contracted exposure).
 The RBI also allows hedging of exposures on the basis of anticipated exposure as defined in the
guidelines. While the contracts can be cancelled and rebooked, there are certain restrictions
around passing of gains in such cases. Further details can be provided on request.
 Also, as part of the documentation simplification process, the RBI allows users to book
forward contracts involving INR of up to USD10m equivalent notional outstanding at any
point without the need to establish an underlying exposure. Further details can be provided
on request. FPIs may hedge their exposure onshore through forward contracts or options.
The forward contracts booked may be rolled over on or before maturity.
 Non-resident corporate entities having exposure to INR (through INR invoicing) can also
access the onshore deliverable forward and options market.
 Onshore INR currency options have been permitted since July 2003. All regulations relating
to forward contracts also apply to currency options.
41
January 2023
Other hedging instruments

 Companies are allowed to use currency and coupon swap transactions to hedge the FX
exposure on long-term foreign currency loans or to manage interest costs on INR-
denominated borrowings.
 Companies can use interest rate options, caps, collars and forward rate agreements (FRAs)
to hedge the interest rate exposure on foreign currency borrowings. All market participants
can also use currency futures and options, subject to certain restrictions on the total
positions, to hedge their exchange rate risk on exchanges recognised by the Securities and
Exchange Board of India (SEBI). The exchange market functions subject to the directions,
guidelines, and instructions issued by RBI and the SEBI from time to time.
 Effective 1 January 2022, RBI has also relaxed regulation to allow companies to enter into
structured derivatives products, such as barrier options, swaptions, and other exotic
derivatives, subject to certain guidelines.
External borrowings by residents

 Eligible resident entities can borrow from recognised non-resident entities abroad via the
External Commercial Borrowings (ECB) route, subject to certain regulatory controls. The
framework for raising funds through ECB comprises two tracks, which allow residents to
raise funds in either local or foreign currency, subject to restrictions on minimum average
maturity, type of entities eligible, specific end-use, all-in costs, etc.
 Corporates can also avail themselves of ECB from their parent, i.e. foreign equity holder,
subject to certain terms and conditions. The central bank has relaxed the end-use to
include ‘general corporate purposes’ as well. Parental ECB can be provided in INR, so the
currency risk shifts to the parent, i.e. foreign equity holder. The RBI allows onshore
Authorised Dealer banks to offer hedging products like FX forwards, options and swaps to
the resident borrower or the offshore foreign equity holder. Corporates are also eligible to
issue INR-denominated bonds overseas with a minimum average maturity of three years
(Masala bonds). Indian banks are, however, not permitted to issue such bonds. All offshore
investors, subject to certain conditions, are eligible to subscribe to these bonds.
Bonds
 Foreign investors can invest in INR bonds via three different routes.
 Foreign Portfolio Investor (FPI) scheme: There is a quota available for foreign
investments in different categories of debt securities and for different type of foreign
investors (central banks, insurance companies, hedge funds, etc.). There are some
macro-prudential and other regulatory requirements, such as regarding minimum
residual maturity and concentration in single security.
 Voluntary Retention Route (VRR): In 2019, the VRR was introduced for foreign
investors to invest in INR debt markets without macro-prudential and other regulatory
norms applicable under the FPI regime. To invest through this route, FPIs have to
commit to stay invested for a minimum period of three years. There is also a quota for
investments through this channel.
 Fully Accessible Route (FAR): The RBI introduced a new FAR for foreign investments in
Indian Government Securities (Gsecs) in March 2020, allowing foreign investments in a
few liquid benchmark securities without any limit or restrictions. As of January 2023, there
are 23 securities under the FAR with an outstanding amount of cINR26.5trn (USD322bn).
42
January 2023
Table 1: Debt limits for foreign portfolio investors, applicable for Oct 2022-Mar 2023
Category INRbn
Government bonds 2,678.90
Government bonds (for long-term FPIs) 1,368.90
State Development Loans 928.28
State Development Loans (for long-term FPIs) 71.00
Corporate debt 6,678.71
Source: RBI, HSBC
Derivatives
 In addition to the above, the RBI had liberalised the regulations for Risk Management by
Residents and Non-residents from 1 September 2020. This, amongst other things, also
permits offering new derivative products, especially for the Non-retail clients, subject to
certain guidelines.
 In a subsequent notification on 16 September 2021, the RBI issued the final guidelines for
market makers in OTC derivatives, which came into effect from 3 January 2022. These
guidelines enable Indian corporates (non-retail) access to some new derivative products,
which are being used quite regularly in international markets.
Repatriation of funds
Dividends and royalties
 Companies may remit dividends overseas to foreign investors after they have been
declared by the board of directors of private limited companies or public limited companies.
 Companies can remit dividends to non-resident shareholders after all applicable taxes are paid.
 Companies can remit royalty payments to foreign parent companies, subject to pertinent
rules and regulations being met.
Interest and principal

 Remittance of interest on foreign currency loans/bonds is permitted.
 Remittance of principal is allowed as per the original loan agreement.

 Tax clearance documentation must be submitted for non-trade related payments.
INR account for non-residents

Non-residents with business interests in India can open an INR account with Authorised Dealer
(AD) banks in India for the purpose of putting through bona fide transactions in INR. Some of
the examples are:
1. External Commercial Borrowings in INR
2. Trade Credits in INR
3. Trade (Export/Import) Invoicing in INR
4. Business-related transactions outside the International Financial Service Centre (IFSC) by

IFSC units at GIFT city-like administrative expenses in INR outside the IFSC, INR amount
from the sale of scrap, government incentives in INR, etc. The account will be maintained
with a bank in India (outside the IFSC).
Detailed guidelines can be found at:

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11739&Mode=0
43
January 2023
Indonesian rupiah (IDR)
 Bank Indonesia (BI), the central bank of the Republic of Indonesia,

said it implements a floating regime for the IDR
 Offshore, the IDR is only tradable on a non-deliverable basis
 There is a domestic non-deliverable forwards market
Normal Market Conditions The following products are available:

Onshore average 
USD1bn Spot FX
daily spot volume:
Onshore spot  Forwards out to five years (onshore)
average transaction USD3m
size:  Domestic non-deliverable forwards
Onshore bid/ask 5-10 pips
spread: (5-10IDR)  FX options out to one year (onshore) and further tenors on a case-by-case basis
Onshore average daily
USD500m 
forward volume: IDR call spread options
Onshore forward
USD10m  Cross-currency swaps out to five years (onshore)
transaction:
Onshore forward
10 pips (10IDR) Spot
spread:
NDF average daily Underlying Transactions are needed for transactions above a certain threshold. Bank Indonesia
USD0.8-1bn
volume: determines the Jakarta Interbank Spot Dollar Rate (JISDOR) every business day. The IDR is
Onshore NDF
USD5m non-deliverable offshore.
transaction:
Onshore NDF Forwards/FX swaps
5 pips (5IDR)
spread:
Offshore average
Underlying Transactions are needed for transactions above specified thresholds. The IDR is non-
USD0.2-0.3bn deliverable offshore.
daily options volume:
Offshore average
USD30m Domestic Non-Deliverable Forward
options transaction:
Offshore implied A DNDF is a foreign currency against IDR forward transaction settled in IDR by calculating the
option volatility 3M: 1 vol
spread between the benchmark rate and the agreed rate. The benchmark rate for USD-to-IDR
spread:
Note: Spreads are subject to change with market DNDF transactions is JISDOR.
developments.
Source: HSBC This alternative hedging product was introduced by BI in 2018. BI offers DNDF contracts
through regular auctions. Domestic banks are free to trade DNDFs amongst themselves (as
market makers), and with clients (both onshore residents and offshore entities).
Underlying Transactions are needed for transactions above specified thresholds. Rollover and
unwind are permitted but early termination is not.
Options and currency swaps

Onshore, plain vanilla options and cross-currency swaps are available. Since September 2016,
IDR call spread options were also allowed. Underlying Transactions are needed for transactions
above specified thresholds.
Offshore, non-deliverable vanilla options and structures out to five years are available with longer
tenors considered on a case-by-case basis. The IDR is non-deliverable offshore.
44
January 2023
Note: Times given are Jakarta local time = GMT + 7 hours
Source: HSBC

(Sun)
22 Jan Chinese New Year
(Sun)  Bank Indonesia (BI) said it implements a floating exchange rate regime.
18 Feb Ascension of Prophet
 However, BI also said it manages the exchange rate to be in line with the currency’s
(Sat) Muham
22 Mar Saka New Year fundamental value and market mechanisms. It said it aims to reduce shocks emerging from
7 Apr Good Friday a demand and supply mismatch in the FX market through intervention in the spot market,
22-23 Apr Hari Raya Aidilfitri the Domestic Non-Deliverable Forwards (DNDF) market and the FX forwards market.
(Sat-Sun)
1 May Labour Day  BI’s mandate is creating and maintaining rupiah stability. Rupiah stability encompasses two
18 May Ascension Day dimensions: (i) price stability of goods and services, as reflected by domestic inflation rates;
1 Jun Pancasila Day and (ii) rupiah exchange rate stability against other currencies.
3 Jun Wesak Day
(Sat) Fixing mechanism
29 Jun Hari Raya Aidiladha  The onshore interbank FX market opens at 0800 (Jakarta local time) and closes at 1600.
19 Jul Hijriyah New Year Lunch time is between 1200 and 1300.
17 Aug Independence Day  BI determines the Jakarta Interbank Spot Dollar Rate (JISDOR) every business day.
27 Sep Maulid Nabi Muhammad
S.a.w  The JISDOR is determined by calculating the volume-weighted average rate of spot USD-
25 Dec Christmas Day IDR transactions traded in the interbank market during the whole day.
Note: Some holidays depend on the Muslim lunar
calendar and may differ from the dates given.  The JISDOR is published on BI’s website every business day at 1615 (Jakarta local time).
Source: National sources
 The methodology was updated on 5 April 2021. Previously, the data collection window was
Bank Indonesia much shorter, between 0800 and 0945, and the announcement time was earlier at 1000.
www.bi.go.id
 BI also determines non-USD reference exchange rates for the IDR every business day.
Bloomberg Fixing Page
JISDORINDEX These are set referring to the JISDOR and the closing exchange rate of other currencies.
Refinitiv Fixing These rates are published at 1630.
JISDOR=
Background
 Indonesia adopted a crawling peg regime in 1986. The value of the IDR was monitored
against a basket of the currencies of Indonesia’s main trading partners.
 Under the crawling peg regime, the IDR underwent a managed depreciation at an average
annual rate of about 4% versus the USD for the five years before 1997, when it was floated
during the Asian Financial Crisis.
 On 19 January 2001, BI announced that a new rule would be enforced to prohibit onshore
banks from lending to non-resident accounts to prohibit any IDR transfers to offshore
accounts. This effectively prevented offshore IDR trading, causing the currency to become
non-deliverable offshore.
 A new set of FX regulations – 24/7/PBI/2022, 24/10/PADG/2022 and 24/11/PADG/2022 –
came into force on 4 July 2022 to consolidate all the rules that were previously contained in
a large number of disparate regulations.
45
January 2023
Key regulations for FX transactions
Underlying Transactions are needed for FX to IDR transactions (including DNDF transactions)
beyond certain thresholds
 Banks making FX-to-IDR transactions (cash and derivative) must ensure that there are
Underlying Transactions beyond specific transaction thresholds. Interbank trading is exempt
from such requirements.
 Cash: USD100,000 (or equivalent) per month per person.
 Forwards: USD100,000 (or equivalent) per month per person for buying transactions
and USD5m (or equivalent) per transaction for selling transactions. Note: These
thresholds apply for Domestic Non-Deliverable Forward (DNDF) transactions as well.
 Other derivatives: USD100,000 (or equivalent) per month per person for FX purchase
transactions and USD5m (or equivalent) per transaction for FX sale transactions.
 The currency of the FX-to-IDR transactions should be the same as that of the Underlying
Transactions.
 The nominal amount of the FX to IDR transactions must be equal or less than the
Underlying Transactions.
 The tenor of the FX-to-IDR transactions must also be equal or less than the period covered
by the Underlying Transactions.
 Types of Underlying Transactions include:
 Current account activities
 Financial account activities (direct investments, portfolio investments)
 Credit or financing from banks to residents for trading and investment purposes
 Domestic goods and services trading (transactions exempted from the mandatory
Rupiah application)
Transaction Restrictions
 Banks must not make the following transactions:
 Outward IDR transfer
 FX-to-IDR Non-Deliverable Forward Transactions overseas
 Disbursement of overdraft, credit and/or financing for FX-to-IDR transactions
 Disbursement of overdraft, credit and/or financing in IDR or FX to non-residents (with

some exemptions)
 Subscription of securities in IDR issued by non-residents (with some exemptions)
 Investing in IDR to non-residents
IDR transfer to non-residents

 The beneficiary bank of the IDR transfer must ensure that transfers above a certain
threshold have Underlying Transactions.
 The threshold is USD1m (or equivalent) per transaction.
46
January 2023
Regulations on export proceeds and import payments
BI regulation on the receipt of foreign exchange export proceeds and import payments:
Regulation number 21/14/PBI/2019
 All foreign exchange export proceeds (DHE) must be received by a domestic foreign
exchange bank no later than the end of the third month after the date of the export
notification form (PPE).
 All foreign exchange import payments (DPI) must be reported to BI no later than the end of
the third month after the date of the import customs notice (PPI).
 Submission of a DHE/DHI report is required for an export/import value greater than the
equivalent of USD10,000.
For exports of natural resources

 All Foreign Exchange Proceeds from the Exports of Natural Resources (DHE SDA) must be
received through a bank in the DHE SDA special account no later than the end of the third
month after the PPE month.
 A bank must provide a special marker (flag) for each DHE SDA special account in the
bank’s internal system and ensure the transfer of incoming funds to the DHE SDA special
account only comes from the specified source.
 Transfers of funds out of the DHE SDA special account can be carried out within the framework
of the purpose referred to in the PP DHE SDA. Supporting documents are required.
Mandatory use of the rupiah
Mandatory use of the rupiah in the territory of the Republic of Indonesia: Regulation
number 17/3/PBI/2015
 This regulation is based on the principle of territoriality. All transactions within the territory of
Indonesia, whether by residents or non-residents, be it in cash or non-cash transactions,
must use the rupiah.
 Transactions and payments constitute an integral part. When a transaction is conducted in
the territory of Indonesia, the payment must also be received in the IDR.
 The obligation to use the rupiah is not applicable to transactions as follows:
 certain transactions within the framework of the implementation of the state budget (APBN)
 the acceptance or the grant of hibah from or to abroad
 international trade transactions
 foreign currency deposits in banks
 international financing transactions
 transfers of funds in foreign currency from individuals in the country to foreign parties that are
not intended as a payment or settlement of liabilities arising from transactions in Indonesia
 transactions conducted in foreign currencies based on legislative provisions, which include:
 Business activities in foreign currency by a bank; this includes fees/charges to

customers on business activities in foreign currency
 Transactions in the primary market and the secondary market of securities in

foreign currency issued by the government
 Other transactions in foreign currencies that are conducted on the basis of laws
47
January 2023
 All parties are prohibited from declining to accept rupiah in transactions

 To support the implementation of this rule, every business undertaking – whether individual or
corporate – must quote prices for goods and/or services only in IDR. Dual quotation is prohibited.
Regulations on corporates’ external debt
BI regulation on application of prudence principle in non-bank corporate external debt

management: Regulation number 16/21/PBI/2014
 Any non-bank corporation (including a state-owned company) that receives offshore debt in
foreign currency must apply prudence principles by meeting minimum hedging levels and
observing liquidity ratios and credit ratings (see Table 1 below).
 The definition is wide and includes debt owed by Indonesian subsidiaries to foreign parent
companies.
 The main objective of this regulation is to mitigate various risks (including currency risk,
liquidity risk, and over-leverage risk) from offshore loans by corporates in Indonesia.
Table 1: Central bank regulation requires companies to hedge their external debt
Requirement Stage I Stage II Stage III
Effective Date 1 Jan 2015-31 Dec 2015 1 Jan 2016 onwards 1 Jan 2017 onwards
Hedging coverage Due in ≤ 3 months: 20% Due in ≤ 3 months: 25%
(% of net FCY liabilities) Due in > 3 to 6 months: 20% Due in > 3 to 6 months: 25%
Liquidity ratio 50% 70%
(% of FCY assets vs FCY
liabilities maturing ≤ 3 months)
Credit Ratings* - Required Required
Hedging Coverage Not compulsory with banks in Indonesia Must be done with banks in
Indonesia
Definitions:
FCY assets = liquid current assets in FCY, which includes cash, giro, savings, time deposits, marketable securities (including trading, available for sell and held to maturity,
which is due in <6 months), trade receivables and inventory and derivative receivables
FCY liabilities = current liabilities in FCY and derivative payables, excluding trade payables
Net FCY liabilities = FCY assets – FCY liabilities
*Excluding refinancing and loans from bilateral/multilateral agencies related to infrastructure.
Source: HSBC
48
January 2023
Malaysian ringgit (MYR)
 Bank Negara Malaysia (BNM), the central bank of Malaysia,

maintains a liberal foreign exchange policy
 The MYR is not convertible outside Malaysia
 Several initiatives to deepen the onshore FX market were
implemented in recent years
 The MYR is not convertible outside Malaysia

Average daily  Onshore spot FX and forwards
interbank spot USD580m
volume:  FX options in MYR and other currency pairs
Average spot  Structured derivatives and investments
USD5m
transaction:
Bid/ask spread: 20-50 pips  MYR fixed income securities
Average daily FX  Interest rate swaps and options (IRS and IRO)
USD3.5bn*
swaps volume:
Average FX swaps  Forward rate agreements
USD30m
transaction:  Wealth management products
FX swaps
1M-12M: 5-100 pips
spread: Spot
Average daily
USD10m Offshore entities may access the onshore spot and FX forwards market for many categories of
options volume:
Average options transactions. Details of the permitted transactions are provided in the following pages.
USD10m
transaction:
Implied option Forwards/FX swaps
3M: 1 vol
volatility spread: An onshore forwards market is available in USD-MYR and major currency pairs. Liquidity is
developments ample up to one year.
*Includes all maturities, including overnight
Source: HSBC
Options
An onshore USD-MYR currency option market exists for corporate and retail customers for
hedging and investment purposes, respectively. A range of FX structured products is also
available for risk management or investment purposes.
FX framework

 The MYR trades in floating exchange rate arrangement with its value largely determined by
market forces and economic fundamentals.
Fixing mechanism
 Effective from 18 July 2016, the USD-MYR spot fixing is computed with a new methodology
based on market transaction data. Specifically, the weighted average volume of the
interbank USD-MYR FX spot rate transacted by domestic financial institutions between
0800 local time to 1500 local time.
 The reference rate is known as the Kuala Lumpur USD/MYR reference rate. It is published
daily at 1530 local time on Refinitiv MYRFIX2 and Bloomberg BNMF#1.
49
January 2023

Note: Kuala Lumpur local time = GMT + 8 hours
Source: HSBC
2023 Holiday Calendar Background

2 Jan New Year’s Day  Prior to 1 September 1998, the MYR traded under a floating exchange rate mechanism.
(observed)
22-23 Jan Chinese New Year  From 1 September 1998 to 21 July 2005, the MYR was fixed at a USD-MYR exchange rate of
(Sun-Mon) 3.80. The peg was removed on 21 July 2005, just hours after the revaluation of the RMB.
1 Feb Federal Territory Day
5 Feb Thaipusam Day  CNY-MYR started quoting on the CFETS (China Foreign Exchange Trading System) from
(Sun) 19 August 2010 to facilitate settlement of bilateral trade and services in CNY and MYR.
8 Apr Nuzul Al-Quran
22-23 Apr Hari Raya Puasa  On 18 July 2016, the official closing hour for onshore ringgit market was extended from
(Sat-Sun)
1700 local time to 1800. Nevertheless, the onshore market participants can continue to
1 May Labour Day
transact after the official closing hour.
4 May Wesak Day
5 Jun Agong’s Birthday  Several initiatives to deepen the onshore FX market were implemented in recent years – on
29 Jun Hari Raya Haji 5 December 2016 (Supplementary Notice), 2 May 2017 (Supplementary Notice No. 2),
19 Jul Awal Muharram
11 September 2017 (Supplementary Notice No. 3), 17 August 2018 (Supplementary Notice
31 Aug National Day
No. 4), 27 March 2019 (Supplementary Notice No. 5), and 30 August 2019 (Supplementary
16 Sep Malaysia Day
Notice No. 6). On 15 April 2021 and subsequently on 1 June 2022, BNM updated the
28 Sep Prophet Muhammad’s
Birthday Foreign Exchange Notices 1-7 to supersede all recent supplementary notices. The updated
12 Nov Deepavali rules can now be accessed on this webpage: https://www.bnm.gov.my/fep
(Sun)
25 Dec Christmas Day
Note: Some holidays are based on the lunar
calendar and are subject to change.
Key foreign exchange regulations
Additional Information Repatriation

Bank Negara Malaysia  Foreign direct investors are able to repatriate their investments, including capital, profits,
www.bnm.gov.my dividends and interest.
Securities Commission
www.sc.com.my  Non-resident portfolio investors may repatriate their principal and profits.
Treasury Malaysia
www.treasury.gov.my  Repatriation must be undertaken in foreign currency.
Stock Exchange
www.bursamalaysia.com Foreign currency transactions and trading
Bloomberg fixing page  All foreign exchange transactions by residents must be done through licensed onshore
BNMF#1
Refinitiv fixing page banks (LOBs).
MYRFIX2
 Non-residents can buy or sell MYR against foreign currencies either onshore with a LOB or
offshore via an appointed overseas office (AOO)4.Transactions on behalf of a related entity
within a group are allowed, provided that said entity is not a financial institution.
 A resident is allowed to buy or sell foreign currency against the MYR on a spot or forward
basis with an AOO to facilitate settlement for the following purposes:
 International trade of goods or services with residents;
 Purchases or sales of MYR assets by non-residents for their own accounts.
 Foreign exchange transactions against the MYR need to be supported by underlying
commitments; transactions between foreign currencies do not.
4
An AOO can be a holding/parent entity, subsidiary entity, sister entity, head office or branch outside Malaysia within a
LOB’s banking group. It can also be an overseas office outside the LOB’s banking group, subject to the approval of BNM.
50
January 2023
Forwards, swaps and options

 Residents can use forward contracts, swaps and currency options to manage their foreign
exchange risk. Residents are allowed to enter into hedging arrangements on committed or
anticipatory current account transactions and financial account transactions, including, but
not limited to, loan repayments and equity hedges on foreign currency exposures of
approved investments abroad. The maturity dates of the forwards should be the expected
dates of the receipt or payment of the underlying transaction.
 Resident institutional investors are able to do dynamic hedging – free cancellation without
documentary evidence – in plain vanilla FX forwards, up to 100% of the invested foreign
currency-denominated assets. They will be able to do this with a LOB, after a one-off
registration with BNM.
 For greater flexibility in managing currency exposures of debt obligations, resident
companies are allowed to enter into swap transactions with:
 A LOB – to convert an existing MYR debt obligation into a foreign currency debt
obligation, subject to the condition that there is no actual delivery of the foreign currency
at the inception of the transaction.
 A LOB or a non-resident – to convert an existing foreign currency debt obligation into

another foreign currency debt obligation
 Non-residents are allowed to enter into certain FX forward contracts onshore, as follows:
 Buy or sell foreign currency (FC) against ringgit on a spot basis for any purpose for own
account.
 Buy or sell FC against ringgit on a forward basis based on underlying obligation for own
account. A ringgit derivatives contract other than the exchange rate offered by a
resident is considered as part of the underlying obligation. There is also no restriction to
unwind or cancel the forward transaction for any underlying except portfolio investment.
 A non-resident entity can enter into FX transaction involving the MYR (spot or forward
basis) on behalf of its resident and non-resident related entity.
 Non-resident institutional investors are also able to do dynamic hedging – free cancellation
without documentary evidence – in FX forwards, up to 100% (where it involves selling MYR)
and up to 25% (where it involves buying MYR) of the invested MYR-denominated assets.
They will be able to do this with a LOB or an AOO, after a one-off registration with BNM.
 Trust banks and global custodians can also apply under the programme to undertake
dynamic hedging on behalf of their clients.
 Apart from FX transaction, any non-resident (with or without underlying) may also trade
ringgit-denominated interest rate derivative with a licensed onshore bank or an AOO.
 Resident and non-resident entities are allowed to unwind any forward basis transaction with
LOBs, except for transactions where the firm commitment is a portfolio investment.
51
January 2023
Payments and receipts

 With effect from 1 June 2022, rules regarding payment in foreign currency between
residents were updated. A resident is free to pay to, or receive foreign currency (FC) from,
another resident for the following:
 Any purpose between immediate family members;
 Education, employment or migration outside Malaysia;
 A transaction between the resident and a licensed onshore bank, a licensed

international takaful operator or an international currency business unit of a licensed
takaful operator, in the conduct of the latter’s business involving FC;
 Settlement of –
 a FC-denominated derivative, excluding exchange rate derivatives, transacted on a

Specified Exchange under the Capital Markets and Services Act 2007 (CMSA)
between the resident and a resident futures broker;
 a commodity murabahah transaction between residents undertaken through a

resident commodity or a non-resident trading service provider;
 a domestic trade in goods or services between a resident exporter and resident

entities involved in global supply chain operations in Malaysia, subject to specified
conditions; or
 a miscellaneous expense incurred outside Malaysia between a resident individual

residing in Malaysia and a resident individual residing outside Malaysia.
 A resident is free to make or receive FC payment to or from a non-resident for any purpose,
except for –
 FC-denominated derivatives offered by the resident unless it is approved by BNM;
 ringgit derivatives unless it is approved by BNM; or
 exchange rate derivatives offered by a non-resident unless it is approved by BNM.

 With effect from 1 June 2022, rules regarding repatriation and conversion of export
proceeds were updated.
 An exporter of goods can receive proceeds from its export of goods in ringgit or foreign
currency (FC). The exporter shall repatriate the export proceeds to Malaysia in full value
within six months from the date of shipment. Repatriation up to 24 months is only
allowed for reasons beyond the exporter’s control and other permitted reasons.
 An exporter can undertake offsetting, netting-off and writing-off arrangement of export

proceeds subject to permitted reasons only.
 A resident is free to buy or sell ringgit against foreign currency (FC) with a licensed onshore
bank (excluding international Islamic banks) on a spot or forward basis for current and
financial account transactions either on firm commitment or anticipatory basis.
 For settlements in MYR:
 Payment/receipt of MYR by the resident to/from the non-resident must be made

into/from the external account of the non-resident.
 Any conversion of foreign currency into MYR or vice versa for the settlement must be
undertaken with a licensed onshore bank or an appointed overseas office approved
by BNM.
52
January 2023
 Non-residents can only obtain a MYR trade financing facility from an onshore licensed
bank (other than an onshore licensed Islamic bank) or an appointed overseas office
approved by BNM.
 Any remittance abroad must be undertaken in foreign currency.
Foreign currency and MYR accounts

 Licensed onshore banks are allowed to open foreign currency accounts for residents and
non-residents.
 With effect from 5 December 2016, “Foreign Currency Account I” and “Foreign Currency
Account II” for residents will be replaced with “Trade Foreign Currency Account” and
“Investment Foreign Currency Account”, respectively.
 Licensed onshore banks are allowed to open MYR accounts for non-residents, known as
‘external accounts’.
Borrowing in foreign currencies

 A resident company is allowed to borrow foreign currency of:
 Any amount from a LOB
 Any amount through the issuance of foreign currency debt securities to another resident
 Any amount from a resident or non-resident entities within its group of entities
 Any amount from a non-resident direct shareholder up to MYR100m equivalent in

aggregate on a group basis, from other non-residents based on the aggregate
borrowing of the resident entity, and from other resident entities within its group of
entities. Approval from the central bank is required for borrowings above the limit.
 A resident individual is allowed to obtain foreign currency credit facilities up to an equivalent
of MYR10m in aggregate from LOBs or non-residents.
Borrowing in MYR
 Resident companies can borrow in MYR from non-residents, including through the issuance
of MYR-denominated redeemable preference shares or loan stocks, up to:
 Any amount from a non-resident entity within its group of entities/non-resident direct
shareholder to finance activities in the domestic ‘real sector’
 Any amount through issuance of tradable securities or Islamic securities denominated in

MYR in Malaysia to non-residents
 Up to MYR1m, in aggregate on a group basis, from other non-resident non-bank

companies or individuals
 Non-residents can borrow MYR from residents:
 Through the issuance of private debt securities or Islamic private debt securities in MYR
approved by BNM
 Any amount to finance activities in the real sector in Malaysia
 Up to MYR10m in aggregate via a repurchase agreement or sale-buy back agreement.

 To avoid settlement failure, LOBs may extend MYR intra-day and overnight overdraft
facilities up to two working days with no rollover option to non-resident stock broking
companies or global custodian banks for the purchase of MYR instruments transacted on
Bursa Malaysia, or settled via RENTAS (Real Time Electronic Transfer of Funds and
Securities System) and Bursa Malaysia. The use of the facility to finance direct purchases
of securities, or for any other purpose is prohibited.
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January 2023
Refinancing and guarantees

 A resident is free to obtain financial guarantee from a non-resident.
 A resident is free to issue financial guarantee to or on-behalf of non-resident to secure

borrowing obtained by a non-resident with some exceptions as follows:
 the non-resident borrower is a special purpose vehicle (SPV) or if the underlying

borrowing is being utilised by the resident guarantor, therefore the resident shall be
subjected to the rules on external borrowing; or
 the underlying borrowing will be repaid by a resident, other than when a financial
guarantee is called upon. In such cases, the resident shall be subjected to the rules on
investing in foreign currency assets.
Foreign currency and overseas investments by residents

 A resident company with MYR borrowing is allowed to undertake investments abroad and
investment in foreign currency assets onshore via its Investment Foreign Currency Account:
 Any amount using foreign currency funds sourced from: (i) abroad (other than proceeds
from the exports of goods); (ii) loans by non-residents (subject to prudential limits); and
(ii) loans by LOBs for ODI purposes.
 Up to MYR50m equivalent in aggregate on a group basis per calendar year, using foreign
currency funds from: (i) conversion of MYR; (ii) loans from onshore banks for purposes
other than ODI; (iii) swapping of financial assets; and (iv) transfer from Trade FCA.
 A resident individual with MYR borrowing is allowed to undertake investments abroad and
investment in foreign currency assets onshore via its Investment Foreign Currency Account:
 Any amount where the investment is in real estate outside Malaysia for the purpose of
education, employment or migration
 Any amount using foreign currency funds sourced from: (i) abroad (other than proceeds
from the export of goods); and (ii) loans by onshore banks or non-residents up to
MYR10m equivalent
 Up to MYR1m equivalent in aggregate per calendar year, using foreign currency funds from:
(i) conversion of MYR; (ii) swapping of financial assets; and (iii) transfer from Trade FCA
 For resident licensed unit trust companies, entities offering collective investment schemes,
including closed-end funds, fund managers, and licensed insurers, are free to invest abroad
on behalf of their resident and non-resident clients as follows:
 Up to 100% of the net asset value (NAV) or total funds belonging to resident clients
without domestic MYR borrowing and non-resident clients in conventional and shariah-
compliant assets; or
 Up to 50% of the NAV or total funds belonging to resident clients with domestic MYR
borrowing in conventional assets.
 A resident company/individual with no domestic MYR credit facility is free to invest any amount
abroad and in foreign currency assets onshore.
Offshore market
 The offshore market in USD-MYR became unavailable with the imposition of capital
controls on 1 September 1998.
 While many capital restrictions have been subsequently lifted, the MYR remains a non-
internationalised currency.
54
January 2023
 BNM does not recognise any offshore trading of the MYR, including MYR non-deliverable
forwards (NDFs).
 Entities established under the Labuan International Offshore Financial Centre (IOFC) are
treated as non-residents.
 Offshore entities in Labuan are allowed to buy or sell foreign currency (other than restricted
currencies – the Israeli shekel) against another foreign currency spot or forward with
licensed onshore banks, licensed offshore banks (excluding licensed offshore investment
banks) in Labuan, as well as non-residents outside Malaysia.
55
January 2023
Mauritian rupee (MUR)
 The Bank of Mauritius (BoM) allows the MUR to be freely traded

 The currency is convertible with no exchange rate controls – there
are no restrictions on MUR spot or forwards
 The market for forwards is relatively subdued, but FX swaps against
the MUR are fairly liquid up to one month

Onshore spot 
USD0.02-1m FX spot
transaction:
Onshore bid/ask 30 pips 
spread: (0.30MUR)
FX forwards and FX swaps
Onshore forward
USD0.02-1m Spot
transaction:
Onshore forward 30 pips Liquidity in the interbank market is limited. Transaction sizes in the spot market range from
spread: (0.30MUR) USD0.02m to USD1m on average.
developments.
Source: HSBC Forwards/FX swaps
The market for forwards is relatively subdued, but FX swaps against the MUR are fairly liquid up
to one month.
Table 1: Local MUR restrictions

_____Onshore-onshore bank_____ _____Offshore-offshore bank_____
Swap Forward/swap Spot Forward/swap
MUR Yes 1 year Yes Yes
Source: HSBC
FX framework
 The MUR is freely tradable and convertible with no exchange rate controls.
Background
 A managed floating exchange rate regime was in place prior to 1 July 1994.
 The MUR was devalued in 1979 by about 23% against the SDR; in 1982, the MUR was
officially delinked from the SDR.
56
January 2023
Note: Times given are Port Louis local time = GMT + 4 hours
Source: HSBC
2023 Holiday Calendar Other regulations

1 Jan New Year’s Holiday Regulations
2 Jan New Year’s Holiday  From 1 January 2011, banks have been required to observe a daily overall foreign
22 Jan Chinese Spring Festival
exchange limit not exceeding 15% of their Tier 1 or permanent capital.
1 Feb Abolition of Slavery
4 Feb Thaipoosam Cavadee  All domestic banks are required to submit daily returns on their foreign exchange
18 Feb Maha Shivaratree transactions in all currencies, as well as their overall foreign exchange exposure. Banks’
12 Mar National Day overall foreign exchange positions are monitored on a daily basis.
22 Mar Ougadi
 FX transactions against the MUR above the threshold need to be reported to the central
22 Apr Eid Ul-Fitr
1 May Labour Day bank, stating the details and the purpose of the transactions.
20 Sep Ganesh Chaturthi  Foreign exchange transactions are executed by banking financial institutions that hold a
1 Nov All Saints Day
banking licence issued by the BoM.
2 Nov Arrival of Indentured
Labourers  No official exchange rate is published. Indicative rates are published daily by commercial banks.
12 Nov Divali
25 Dec Christmas Day  Mauritian residents are allowed to hold foreign currency accounts with banks in Mauritius,
Source: Prime Minister’s Office website,
pmo.govmu.org
as well as overseas.
 Non-residents may hold MUR or any foreign currency account without any restrictions.
Bank of Mauritius  There is only one type of banking licence with both offshore and onshore banks falling
bom.intnet.mu
Prime Minister’s Office under the Banking Act of 2004.5
pmo.govmu.org
Repatriation
 There are no limits on repatriation.
5 Please see the website of the Bank of Mauritius for details.
57
January 2023
Philippine peso (PHP)
 The Bangko Sentral ng Pilipinas (BSP) maintains a floating currency

regime but will intervene to manage excessive volatility
 Offshore, the PHP is traded on a non-deliverable forward basis
 Banks are allowed to engage in a range of products but are closely
monitored by the BSP
Normal Market Conditions The following products are available

Onshore average  Spot FX6
USD966m
daily spot volume:
Onshore spot  Onshore forwards out to five years, cross-currency swaps and non-deliverable swaps out to
USD1-3m
transaction: 10 years
Onshore Bid/ask 3-4 cents
spread: (0.03-0.04PHP)  Onshore non-deliverable forwards (NDFs) and FX swaps7
USD765m  Offshore non-deliverable forwards (NDFs)
forward volume:
Onshore forward
USD10-20m  PHP-denominated fixed income securities
transaction:
1M: 1-2 cents 
Onshore forward (0.01PHP) Onshore deliverable and offshore non-deliverable currency options up to three years
spread: 12M: 10-20 cents
 Structured derivatives
(0.10-0.20PHP)
Offshore average Spot
USD400-600m
daily NDF volume:
With effect from 3 January 2022, the onshore spot market, FX forwards, FX swaps and PHP
NDF transaction: 1M: USD5m
interest rate swap markets will trade from 0900 to 1600 local time with no trading break.
1M: 2-3 cents
NDF spread:
(0.02-0.03PHP) A total of 38 local and foreign commercial banks participate in the interbank PHP foreign
Offshore average daily exchange market. All are members of the Bankers Association of the Philippines, which also acts
USD30m
options volume:
as a supervisory body of the electronic network that provides the trading infrastructure. Quotes are
Offshore average
USD30m published on Bloomberg (OTC PH). The official FX Spot trading platform is Bloomberg.
options transaction:
Offshore implied
option volatility 1M: 1vol FX forwards (deliverable)
spread: In the onshore market, PHP forwards are liquid with residents and non-residents allowed to sell
developments. USD-PHP forwards without prior BSP approval. However, neither residents, nor non-residents
Source: HSBC are allowed to buy USD-PHP forwards without proper documentation, as required by the BSP.
FX swaps (deliverable)
The FX interbank swap market is most active between the overnight and three-month tenors with
standard tenors posted from overnight up to the one-year tenor. Done deals are posted on
Bloomberg using PHRF (FX Swaps Trades tab), while live swap prices are posted on Refinitiv and
Bloomberg broker pages (Refinitiv: TRPH01, PPESO, and AFSP01; Bloomberg: OTC PH FWDS).
6 Offshore counterparties can only sell PHP, if the investment is duly approved and registered through the BSRD (Bangko
Sentral ng Pilipinas Registration Document) with the International Operations Department of the BSP. Further proof of
divestment documents and recipient information will also be necessary.
7 FX swaps where the underlying transaction pertains to foreign investment and a loan between a non-resident and a
resident will require registration, or approval and registration from the BSP, respectively.
58
January 2023
Note: Times given are Manila local time = GMT + 8 hours
Source: HSBC
2023 Holiday Calendar FX forwards (non-deliverable)

1 Jan New Year’s Day In the offshore market, USD-PHP is traded on a non-deliverable basis, settled in USD. Daily
2 Jan Special Non-Working NDF turnover is estimated at USD400-600m and trades are executed up to the two-year tenor.
Holiday
22 Jan Lunar New Year
However, liquidity is good only up to the one-year tenor.
25 Feb EDSA People Power FX options
Revolution Anniversary
6 Apr Holy Thursday Offshore FX options are also available with tenors up to three years and further out on a case-
7 Apr Good Friday by-case basis. This market is relatively liquid in the offshore market.
8 Apr Black Saturday
A range of FX structured products are also available for risk management or investment purposes.
10 Apr Monday nearest 9 Apr
1 May Labour Day Interest rate swaps and bonds
12 Jun Independence Day An onshore market exists for PHP interest rate swaps, and an offshore market for non-
21 Aug Ninoy Aquino Day deliverable currency swaps. Liquidity is mostly in the 1-5 year tenors but can go out further to 10
28 Aug National Heroes Day years on a case-by-case basis. Onshore cross-currency swap transactions are conducted
bilaterally between banks and corporate firms as there is no formal interbank market8.
2 Nov Special Non-Working
Holiday The government securities market is active for bills and bonds. Available tenors for Treasury
27 Nov Monday nearest 30 Nov
bills are 91 days, 182 days, and 364 days, where liquidity can be sourced from weekly auctions
8 Dec Feast of the Immaculate
Conception of Mary by the Bureau of Treasury (BTr). Available on-the-run maturities for bonds are 3, 5, 7, 10, 20
25 Dec Christmas Day and 25 years, where liquidity is available in the 3-, 5- and 10-year tenors.
30 Dec Rizal Day
31 Dec Last Day of the Year
Source: Bloomberg FX framework
The BSP is responsible for formulating and implementing monetary policy and foreign exchange
Central Bank of the Philippines
policy. The BSP will intervene in the FX market to defend against what it considers to be
www.bsp.gov.ph
excessive market volatility.
Board of Investment
www.bsp.gov.ph
www.boi.gov.ph
The Philippine government has loosened some of its currency controls over the past few years.
Department of Finance
www.dof.gov.ph Despite the recent moves toward liberalisation, the PHP remains only partially convertible. The
Refinitiv ability to transfer capital to and from the Philippines is largely dependent on the type of
PHPESO
investment and the investment’s registration status with the BSP.
Bloomberg
OTC PH, BAPH
There are numerous government agencies overseeing foreign investments in the Philippines.
Philippine Dealing System (PDS)
www.pds.com.ph The agencies are the Board of Investment (BoI), the Securities and Exchange Commission
(SEC), the Bureau of Trade Regulation and Consumer Protection (BTRCP) and the BSP.
Prospective investors are advised to contact these agencies to officially register their
investment. The BoI is the agency primarily responsible for issuing investment incentives, of
which there are several.
General incentives are offered to companies that increase local productivity, create significant
employment and/or export goods. Incentives are outlined in the Investment Priorities Plan (IPP),
the latest edition of which is available from the BoI.
8 Currency swaps where the underlying transaction pertains to foreign investment and a loan between a non-resident and a
resident will require registration, or approval and registration from the BSP, respectively.
59
January 2023

 The Philippines classifies its exchange rate regime as floating, whereby the value of the
PHP is determined by market forces. This policy was adopted in 1993 after the New Central
Bank Act.
Fixing mechanism
 The spot PHP fix is the weighted average spot rate of trades in the onshore spot market
done from 0900 Manila local time until 1130 Manila local time, one day before the
settlement date as reported by Bloomberg and published on Reuter’s pages PHPESO and
on Bloomberg OTC PH or BAPH. The fixing rate is finalised by 1135 (Manila local time).
Customers may also request to use the afternoon weighted average or the daily weighted
average to determine pricing. This is done on a case-by-case basis.
 Fixing orders must be passed before 0900 (Manila local time) of the trade date with
adjustments of the rate made based on the actual settlement date. Slippage will apply.
 PHIREF is the implied PHP interest rate yield under a specified tenor derived from all
executed USD-PHP swap transactions. This is used as one of the interest rate benchmarks
in the Philippine financial markets. The PHIREF fixing per tenor is derived from the
weighted average of done deals. In the absence of done deals, PHIREF is based on the
average of the majority of the best bids and offers of the broker prices. PHIREF
computation is expected to be revised in line with the demise of LIBOR.
Regulations
Onshore-onshore
 For investment-related transactions, a Bangko Sentral Registration Document (BSRD) is
required to buy onshore USD-PHP.
 Using PHP to buy foreign currency from the banking system to service trade and non-trade
requirements will be subject to the submission of proper documentation as mandated by
the BSP.
 Residents may purchase up to USD500,000 (for individuals) and USD1m (for
corporates/other entities) or its equivalent in foreign currency every day to cover payments
to non-resident beneficiaries for trade (excluding inter-company netting) and non-trade
current account purposes without supporting documentation, except for a duly completed
application to purchase in a standard format. If the purpose is to service loan repayments or
investments, full supporting documentation is required regardless of the amount purchased.
Moreover, FX forward and swap transactions exceeding USD500,000 (for individuals) and
USD1m (for corporates/other entities) covering trade, non-trade current account and
resident-to-resident transactions require the submission of supporting documents on the
settlement date as mandated by the BSP whereas Philippine banks may require
documentation on the transaction date to fulfil the required due diligence review on the
underlying transaction. However, hedging is not allowed for non-trade current account
transactions and resident-to-resident transactions when the underlying is still an exposure
as at the transaction date.
 Residents may purchase foreign currency to cover payments to resident beneficiaries,
subject to full supporting documentation regardless of the amount purchased. Residents
may also purchase foreign currency to invest with an onshore bank in a Time Deposit with a
minimum term of 90 days. Similarly, they may also borrow in foreign currency from an
onshore bank, subject to the bank’s reporting to the BSP.
60
January 2023
 Foreign currency may be freely purchased from authorised agent banks (AABs) and AAB-Forex
corporations without prior BSP approval, subject to documentation as discussed above for:
 Lease of foreign-owned equipment
 Refund of unused foreign grant/aid fees and foreign loan proceeds
 Payment of underwriting expenses/fees/commissions, including broker fees for IPOs

involving Philippine shares
 Settlement by the Philippine Deposit Insurance Corp of foreign currency deposit unit
(FCDU) claims against banks that have ceased operations
 AABs and AAB-Forex corporations may sell FX to importers for advance payment of
imports regardless of the amount without prior BSP approval, though standard
documentation is required.
 Residents may hold foreign currency accounts onshore.
Offshore-onshore (deliverable)
 Non-residents are free to sell foreign currency for PHP onshore.
 Documentary proof is required by offshore counterparties to sell PHP for foreign currency
as shown in Table 1.
Table 1: Documentary requirements for various transactions

Transaction Supporting Documents
1. Sale of Equity Investment Publicly listed: broker’s sales invoice, which should contain the settlement amount, number of
shares, investor identity and settlement date; Bangko Sentral Registration Document (BSRD);
duly signed application to purchase foreign exchange.
Not publicly listed: deed of sale; BSRD; proof of tax payment, duly signed application to purchase
foreign exchange; detailed computation of the amount applied for using the central bank-prescribed
format prepared by the selling stockholder’s representative; audited financial statements.
2. Sale of Government Securities BSRD; duly signed application to purchase foreign exchange; proof of divestment (confirmation
of sale).
3. PHP Time Deposit Maturity BSRD; deposit certificate; duly signed application to purchase foreign exchange. Deposits shall
have a maturity of at least 90 days.
4. Other PHP-denominated debt BSRD; duly signed application to purchase foreign exchange; photocopy of matured security, or
securities issued onshore by proof of sale, or equivalent document covering the debt securities.
private resident firms
Source: BSP Manual of Regulations for Foreign Exchange Transactions
 Non-residents who invest in the local equity or bond markets are required to finance their
transactions either through an inward FX remittance or a withdrawal against foreign
currency accounts where the funds are sourced from an inward FX remittance. For forward
sale of deliverable FX, the tenor/maturity shall be co-terminus with the maturity of the
underlying transaction, as required by the BSP.
 Subject to additional documentary requirements, excess PHP9 initially funded by an inward
remittance of foreign exchange by an offshore entity intended for BSP-registered
investment can be reconverted to the original currency. FX conversion for the above
purpose may be conducted by the resident agent or registering/custody bank on behalf of
the non-resident beneficiary.
9 At least fifty percent (50%) of the funds brought in were invested in the country and duly registered with the
BSP/custodian bank. For unrealised investments, such as (i) disapproved subscription or oversubscriptions to/investments
in equity and debt securities issued by residents and non-residents; (ii) erroneously remitted funds relating to investments;
and (iii) similar cases, the fifty percent (50%) minimum utilisation need not be satisfied.
61
January 2023
 Other instances of excess or erroneous purchases of PHP are not allowed for reconversion
to its original foreign currency form.
 The BSP does regulate foreign currency-denominated loans and some borrowing
from overseas.
 Non-residents may hold local or foreign currency accounts onshore. However, credit to a
local currency account of a non-resident should be subject to the following conditions:
1) funded by an inward remittance wherein a certificate of inward remittance is required; 2)
income generated from Philippine assets wherein a deed of sale is required, if the income
was derived from a sale of an asset, from dividend declaration, or rental fees earned from
renting out property or equipment; 3) onshore receipt from a resident for services rendered
to the latter wherein a copy of the service contract is required and trade transaction
receivables from resident clients subject to documentation; 4) payment in PHP for duly
registered loans; and 5) proceeds from the onshore sale by non-resident issuers of equity
securities listed on the Philippine Stock Exchange (PSE).
 Non-delivery, roll-overs and cancellations of deliverable FX forward and swap contracts are
subject to justification, such as appropriate support documents and acknowledgement from
the transacting party, and will be reported to the BSP.
Repatriation
 Exchange control regulations in the Philippines require all foreign investments to register
with the BSP10, if repatriation of subsequent investment proceeds is to be sourced from the
banking system.
 There is a minimum holding period of 90 days for foreign funds placed in PHP time deposits
to be eligible for registration and eventual repatriation.
 Other forms of investment – e.g. foreign direct investment, government securities, other
fixed income investment and equities – are not subject to this lock-up period.
 Registration of investments in PHP-denominated government securities, PSE-listed
securities and PHP time deposits is done by the custodian bank, which issues a BSRD on
behalf of the BSP11.
 USD investments may be brought back and repatriated in full, provided the inward remittance
was properly registered by the resident agent of the investor, as evidenced by a BSRD.
 Non-residents may purchase FX up to an amount equivalent to the balance of their PHP
account without the need for prior approval from the BSP, provided that, if the PHP account was
funded by an inward remittance, it must have been used onshore as foreign direct investments
or invested in eligible portfolio instruments and registered with the BSP or custodian bank.
10 The grace period (from 8 March 2019 to 7 March 2020) for registration of foreign investments (excluding loans and
guarantees) unregistered as of 8 March 2019 beyond the prescriptive period under Circular No. 1030 dated 5 February
2019 shall be re-opened from 8 March 2020 up to the period covered by Circular No. 1080 and one (1) month thereafter.
Moreover, investments for registration with the BSP whose prescriptive period shall end on 8 March 2020 up to the period
covered by Circular No. 1080 shall likewise be given a grace period of up to one (1) month thereafter. BSP Circular No.
1080 is effective for the duration of the declaration of any form of “community quarantine” by the Office of the President, or
as may be extended by the BSP. These registration windows continue to be open, as affirmed by BSP Circular No. 1124.
11 Under BSP Circular No. 838, the foreign investor or his/her duly authorised representative is required to submit an
“Authority to Disclose Information” in the prescribed format by the BSP relative to all investments registered or held by the
custodian for the account of the foreign investor.
62
January 2023
Offshore-onshore (non-deliverable)
 Non-residents are allowed to sell foreign currency against the PHP on a non-deliverable
basis, subject to the BSP’s capital requirements for onshore banks.
 Effective 26 March 2013, the BSP limited the amount of NDFs that can be booked by AABs on
an aggregate basis for both resident and non-resident counterparties with the banks’ gross open
position in NDFs being subject to a cap of 20% and 100% of the unimpaired capital for domestic
bank and foreign bank branches, respectively. Pre-termination of NDFs is not allowed.
Onshore-offshore
 Most public sector and private sector publicly guaranteed obligations from foreign creditors,
offshore banking units (OBUs) and foreign currency deposit units (FCDUs) require the
BSP’s approval and registration.
 Foreign loans that are not publicly guaranteed shall be registered with the BSP, if FX will be
sourced from AABs/AAB-Forex corporations.
 Onshore entities can purchase FX for outward investment purposes with a threshold of USD60m
per investor per year, subject to documentary requirements. Outward investment in excess of
USD60m shall require notification to the BSP using a prescribed form at least 15 banking days
after the determination that total FX requirements will exceed the threshold.
Offshore-offshore
 Offshore entities can engage in two-way trading on a non-deliverable basis.
Additional information
 Additional provisions on NDFs are provided for in the MORB Section 622: Non-Deliverable
Foreign Exchange Forward Contracts Involving the Philippine Peso.
63
January 2023
Singapore dollar (SGD)
 The Monetary Authority of Singapore (MAS) manages the SGD

against a trade-weighted basket of currencies
 The MAS executes monetary policy through the adjustment of the
slope, midpoint and width of the SGD NEER policy band
 The SGD is fully convertible with excellent liquidity in both the spot
and forwards markets
Normal Market Conditions The following products are available

Average daily spot
USD3.5-4.5bn  Spot FX
volume:
Spot transaction: USD1-3m  FX forwards out to 20 years
Bid/ask spread: 1-2 pips
 FX options out to five years12 and further tenors on a case-by-case basis
Average daily
USD1.3-2.3bn
forward volume:
 Cross-currency swaps out to 20 years
Forward transaction: USD40m
1M-6M: 0.1-1 Spot
Forward spread: pip; 9M-12M: 3- The SGD is a fully convertible currency. Spot is tradable 24 hours a day without any restrictions.
6 pips
Average daily Forwards/FX swaps
USD0.6-1.0bn
options volume:
The most liquid tenors are one year or less.
Average options
USD50m
transaction:
Implied option
Options
3M: 0.3 vol
volatility spread: SGD options are freely tradable, both onshore and offshore. A range of FX structured products
Note: Spreads are subject to change with market is also available for risk management or investment purposes.
developments.
Source: HSBC
FX framework
Background
 Before 1972, the SGD was pegged to the GBP. When the GBP was floated in 1972, the
MAS pegged the SGD to the USD.
 In June 1973, following the USD devaluation earlier that year, the MAS decided to unpeg
the SGD.
 Since 1981, Singapore’s monetary policy has centred on the management of the SGD in a
“Basket, Band, Crawl” (BBC) exchange rate regime.
12 Provided FX hedging is not done for financial assets denominated in local currency, including property.
64
January 2023
Note: Singapore local time = GMT + 8 hours
Source: HSBC

2023 Holiday Calendar  The Monetary Authority of Singapore (MAS) functions as Singapore’s central bank. It aims
2 Jan New Year’s Day to promote sustained non-inflationary growth and a sound and progressive financial centre.
(observed) It focuses on stabilising its own measure of core inflation (although it does not name a
formal inflation target) through the use of the foreign exchange rate rather than interest
7 Apr Good Friday
rates. The MAS’s unique core inflation measure excludes the costs of accommodation
22 Apr Hari Raya Puasa
(imputed rentals) and private road transport (driven by auction prices of car ownership
1 May Labour Day
licenses) but includes the costs of food and energy.
2 Jun Vesak Day
29 Jun Hari Raya Haji  The MAS manages the exchange rate under a BBC framework.
9 Aug National Day
13 Nov Deepavali  Basket: The MAS targets the SGD’s Nominal Effective Exchange Rate (NEER) – the
25 Dec Christmas Day SGD’s value against a basket of currencies. The basket components and the weighting
Source: Singapore Ministry of Manpower are undisclosed, although the MAS publishes the weekly average value of its SGD
NEER index once a month (Bloomberg ticker: SNEER Index).
Monetary Authority of Singapore  Band: The MAS allows the SGD NEER to fluctuate within a band. The width of the
www.mas.gov.sg
band is undisclosed, although most market participants believe it is usually set at +/-2%
Ministry of Trade and Industry
www.mti.gov.sg around the midpoint based on their observations of interventions by the MAS to defend
Ministry of Finance the integrity of the band.
www.mof.gov.sg
 Crawl: The MAS has historically permitted the currency to crawl upwards over time, for
at least the last three decades. The underlying trend of the SGD NEER appreciated by
about 4% per annum on average in the late 1980s and through most of the 1990s, by
around 2% per annum on average through most of the 2000s and early 2010s, and by
around 1% in recent years. The MAS’s policy decisions usually involve changing the
slope of the band. However, unless it has been set to zero, the actual slope parameter
is undisclosed. The MAS’s policy statements contain only qualitative guidance, for
example, whether it has reduced or increased the slope, “slightly” or at a “measured”
pace – or not. Market participants then make quantitative deductions based on their
understanding of the MAS’s policy.
 Re-centring: The MAS has not adopted a negative slope before. When it was necessary to
depreciate the SGD NEER in the past, during severe economic downturns, it re-centred the
policy band lower. Conversely, the MAS has also re-centred the policy band higher many
times before, when inflation and growth were exceptionally strong. Historically, re-centring
tends to take place after the SGD NEER has fallen to the lower bound or risen to the upper
bound, although that is not strictly necessary. The new midpoints would then be set at the
prevailing levels of the index, although the MAS once set the new midpoint at an
undisclosed level below the prevailing level.
 The MAS makes regular policy announcements twice a year, in mid-April and in mid-
October. The MAS can also announce policy changes at any time it sees fit. For example,
on 25 January 2022 and on 14 July 2022, ‘off-cycle’ policy statements were released. The
MAS usually holds a closed-door policy debriefing about two weeks after the policy
statements, along with the publication of the bi-annual Macroeconomic Review.
 The MAS intervenes to defend the integrity of the band when it is tested – such
interventions usually result in abrupt and large moves of the SGD NEER away from the
65
January 2023
limits of the band. However, many believe the MAS also intervenes regularly even when the
SGD NEER is trading comfortably within the band either to “smooth” volatility or to send a
signal about upcoming policy intentions, by guiding the index to what it deems as a more
appropriate level, especially when economic fundamentals have changed abruptly.
 The MAS had, at times, accumulated a lot of FX reserves, such that Singapore was put on
the US Treasury’s “currency manipulation” monitoring list in May 2019. In response, the
MAS said it does not manipulate its currency to gain an export advantage or to achieve a
current account surplus. Partly to address some of the US Treasury’s concerns, the MAS
started to disclose data on its intervention. The MAS consolidates its net FX purchases or
sales over six months and releases that data semi-annually with a three-month lag.
Singapore remains on the latest US Treasury’s monitoring list published in November 2022.
Table 1: HSBC’s SGD NEER basket – current and historical weights

Current basket Historical baskets
Sample period Mar 2019 – Aug 2015- Nov 2012- Jul 2008- Jul 2005- Jan 2003- Jan 1999-
for regression Dec 2022 Feb 2019 Jul 2015 Oct 2012 Jun 2008 Jun 2005 Dec 2002
1) USD 23.84% 20.8% 25.1% 23.1% 25.7% 52.9% 50.3%
2) EUR 15.25% 14.5% 12.6% 11.8% 8.7% 8.3% 8.8%
3) CNY 13.94% 11.6% 11.1% 12.5% 11.7% 0% 0%
4) MYR 13.10% 12.9% 14.4% 12.2% 15.9% 0% 0%
5) JPY 5.81% 9.3% 10.8% 11.0% 8.8% 9.3% 10.0%
6) IDR 5.23% 4.9% 4.1% 5.2% 5.9% 5.6% 5.5%
7) AUD 4.86% 6.3% 4.4% 3.6% 4.7% 5.3% 5.0%
8) GBP 4.85% 4.1% 2.5% 3.9% 2.2% 3.1% 5.1%
9) TWD 3.68% 4.1% 5.4% 5.2% 4.4% 3.1% 6.4%
10) PHP 2.96% 4.1% 2.0% 2.4% 0.8% 1.2% 1.2%
11) KRW 2.67% 2.5% 2.7% 3.0% 5.1% 4.5% 3.1%
12) THB 2.11% 3.3% 2.4% 5.2% 5.5% 5.1% 4.6%
13) INR 1.70% 1.7% 2.3% 1.0% 0.7% 1.5% 0%
Source: HSBC
Table 5. Historical changes in the SGD NEER policy band – HSBC’s interpretations of
past MAS policy decisions
Policy decision Slope Width Re-centring
4 Jan 1999 Re-centre (lower) at prevailing level 0% +/-2% Yes
1 Jul 2000 Restore modest and gradual appreciation 2% +/-2% No
12 Jul 2001 Shift to a 0% appreciation policy 0% +/-2% No
10 Oct 2001 (off-cycle) Widen the policy band 0% +/-3% No
2 Jan 2002 Re-centre (lower) at prevailing level; restore narrower band 0% +/-2% Yes; -2.25%
10 Jul 2003 Re-centre (lower) at prevailing level 0% +/-2% Yes; -2%
12 Apr 2004 Restore modest and gradual appreciation 2% +/-2% No
10 Oct 2007 Increase slightly the slope of the band 3% +/-2% No
10 Apr 2008 Re-centre (higher) at prevailing level 3% +/-2% Yes; +2%
10 Oct 2008 Shift to a 0% appreciation policy 0% +/-2% No
14 Apr 2009 Re-centre (lower) at prevailing level 0% +/-2% Yes; -2%
14 Apr 2010 Restore modest and gradual appreciation; re-centre (higher) at 2% +/-2% Yes; +2%
prevailing level
14 Oct 2010 Increase slightly the slope of the band; widen the band slightly 3% +/-3% No
14 Apr 2011 Re-centre (higher) at below the prevailing level 3% +/-3% Yes; +1.75%
14 Oct 2011 Reduce the slope of the band 1% +/-3% No
12 Apr 2012 Increase slightly the slope of the band; restore narrower band 2% +/-2% No
28 Jan 2015 (off-cycle) Reduce the slope of the band; a measured adjustment 1% +/-2% No
14 Oct 2015 Reduce slightly the slope of the band; a measured adjustment 0.5% +/-2% No
14 Apr 2016 Shift to a 0% appreciation policy 0% +/-2% No
13 Apr 2018 Increase slightly the slope of the band; a measured adjustment 0.5% +/-2% No
12 Oct 2018 Increase slightly the slope of the band; a measured adjustment 1% +/-2% No
14 Oct 2019 Reduce slightly the slope of the band; a measured adjustment 0.5% +/-2% No
30 Mar 2020 Shift to a 0% appreciation policy; re-centre (lower) at prevailing level 0% +/-2% Yes; -1%
14 Oct 2021 Increase slightly the slope of the band 0.5% +/-2% No
25 Jan 2022 (off-cycle) Increase slightly the slope of the band 1% +/-2% No
14 Apr 2022 Increase slightly the slope of the band; re-centre (higher) at 1.5% +/-2% Yes; +2%
prevailing level
14 Jul 2022 (off-cycle) Re-centre (higher) at prevailing level 1.5% +/-2% Yes; +1.5%
14 Oct 2022 Re-centre (higher) at prevailing level 1.5% +/-2% Yes; +2%
Note: Tightening decisions are in red. Easing decisions in blue. Unchanged parameters in black. Source: MAS, HSBC estimates
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January 2023
Liquidity facilities
MAS Intra-day Liquidity Facility

 This lends SGD to eligible financial institutions on an intra-day and collateralised basis at the
prevailing market rate (currently at 0%). It is meant to facilitate the settlement of payments and
helps to prevent system gridlock owing to timing mismatch. The operating window is daily,
0900-1700 local time. Liquidity reversal will take place automatically at 1730 local time.
MAS Standing Facility

 This is a discount window that allows eligible financial institutions to borrow SGD on an
overnight and collateralised basis (reference rate + 50bp), or to deposit SGD on an
overnight basis (reference rate - 50bp, floored at zero). The reference rate is the weighted
average of successful bids for the MAS’s USD500m overnight clean borrowing conducted
during Money Market Operations on the same day, rounded to two decimal places.
 The operating window for the deposit is 1800-1845 local time. The operating window for
loans collateralised by SGS and MAS bills is 1700-1845 local time. The operating window
for loans collateralised by other collateral (including foreign currency collateral) is 1430-
1530 local time.
 The Standing Facility promotes SGD interest rate stability by setting a cap and floor on the
SGD overnight interest rate, and enhances market confidence that liquidity needs will be
met in times of payment gridlock and liquidity tightness.
MAS SGD Term Facility

 This facility was launched on 28 September 2020. It offers SGD loans in the 1-month and
3-month tenors, complementing the existing overnight MAS Standing Facility. It also
accepts more types of collateral – including mortgages – compared to the MAS Standing
Facility. For borrowing against most types of collateral other than mortgages, the rate will
reference the most recent MAS bills auction cut-off yield of the corresponding tenor, plus a
spread of 50bp. The operating window is every Wednesday, from 1430 to 1530 local time.

 The SGD is fully convertible.
 There are no foreign exchange controls in Singapore.
Repatriation
 There are no restrictions on the repatriation of capital.
 There are no restrictions on remitting profits or dividends, although documents should be

made readily available upon request.
Regulations
 Singapore eliminated most controls on foreign exchange transactions in 1978. The only
remaining restrictions pertain to non-residents financing offshore projects with SGD.
 Non-residents must convert proceeds from onshore financing activities to foreign currency,
if those funds are to be used offshore. Credit facilities extended to non-resident financial
institutions are limited to SGD5m (see MAS Notice 757 below).
 Both residents and non-residents may borrow internationally.
 Non-residents may hold local or foreign currency accounts onshore.
 For residents, there are no restrictions on SGD spot, forward or currency options.
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January 2023
Provisions under MAS Notice 757 (released May 2004)

 SGD credit facilities include loans, contingent credit lines and FX swaps involving a spot
sale of SGD to a non-resident in the first leg.
 Banks may lend SGD to non-resident financial institutions (NRFIs) for any purpose, whether in
Singapore or overseas, provided that the aggregate SGD credit facilities do not exceed SGD5m
per entity13. The limit must not be circumvented by combining spot and forward transactions.
 Individuals and non-financial entities, including corporate treasury centres, are not subject
to the restrictions under MAS Notice 757.
 For amounts exceeding SGD5m per entity, if the SGD proceeds are to be used outside
Singapore, they must be swapped or converted into foreign currency upon drawdown.
 Banks may extend temporary SGD overdrafts of any amount to nostro accounts of NRFIs
for the purpose of preventing settlement failures. However, banks must take reasonable
steps to ensure that the overdrafts are covered within two business days.
 SGD credit facilities should not be extended to a NRFI, if there is reason to believe that the
purpose is SGD currency speculation.
 There is no restriction on cross-currency swaps where the need arises from capital market,
economic and financial activities. However, the SGD5m FX swaps restriction still applies.
 There are no restrictions on FX options, asset swaps, cross-currency swaps and repos.
 No other restrictions or guidelines will apply to the use of SGD, other than those explicitly stated.
SGD securities – borrowing and lending activities

 Banks may lend any amount of SGD-denominated securities to a NRFI in exchange for
SGD or foreign currency-denominated collateral.
Equity and bond issuance

 SGD-denominated equity or bond issues for non-residents14 may be arranged as long as
the SGD proceeds raised, if not used in Singapore, are converted into foreign currency
before being remitted abroad.
 Where the bond issuer is an unrated foreign entity, banks may place or sell SGD only to
sophisticated investors.
 Non-residents may hold an unlimited number of SGD or foreign currency accounts without
authorisation.
13 For NRFIs seeking to obtain SGD credit facilities, each subsidiary is considered a separate entity, while the head office
and all overseas branches are collectively regarded as one entity.
14 Under MAS Notice 757, residents are companies that are 50%-owned by Singapore citizens or financial institutions in
Singapore that are governed by the MAS; all others are considered non-residents.
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January 2023
South Korean won (KRW)
 The Bank of Korea (BoK) oversees a floating exchange rate regime

and may intervene at times to smooth excess volatility
 The KRW is fully convertible but only tradable on a non-deliverable
forward (NDF) basis in the offshore market
 The offshore NDF market is liquid with an estimated daily turnover of
USD3-4bn for the 1m contract

Onshore average
USD7bn  Spot FX15
daily spot volume:
Onshore spot
USD3-5m  Non-deliverable forwards (NDFs) out to 10 years
transaction size:
Onshore bid/ask 
10 pips (0.10KRW) Non-deliverable FX options out to five years and further on a case-by-case basis
spread:
Onshore average daily <1m: USD8bn 
forward volume: >1m: USD3bn
Non-deliverable cross-currency swaps out to 10 years
Onshore forward <3m: USD50m 
transaction size: >3m: USD20m
Onshore cross-currency and interest rate swaps out to 15 years
Onshore forward 1M: 10 pips  Onshore and offshore structured derivative products
spread: (0.10KRW)
Offshore average 
USD3-4bn KRW and hard currency bonds, onshore fixed income and money market products
daily NDF volume:
NDF transaction
1M: USD10m Spot
size:
NDF spread: 1M: 20 pips The KRW is fully convertible; however, it is only tradable on a non-deliverable basis in the
(0.20KRW) offshore market.
Average daily
USD1.5bn
options volume: Forwards/FX swaps
Average options
USD50m Onshore, there is an active conventional FX forwards market. Offshore, the KRW is actively
transaction:
Implied option traded in the form of USD-settled non-deliverable forwards (NDFs). The best liquidity is found in
3M: 0.4 vol
volatility spread: tenors of one year or less.
developments.
Source: HSBC Options
Currency options are available both onshore and offshore, though on a non-deliverable basis in
the offshore market. Tenors extend out to five years with longer tenors available on a case-by-
case basis.
15 Onshore only; offshore counterparties must have an underlying investment.
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January 2023
Note: Seoul local time = GMT + 9 hours
Source: HSBC

(Sun) Foreign exchange policy is principally determined by the Ministry of Economy and Finance
(MoEF), while the central bank, the Bank of Korea (BoK), oversees foreign exchange
1 Mar Independence Day
movements according to this policy. The primary legislation governing foreign exchange
1 May Labour Day
transactions is the Foreign Exchange Transaction Act (FETA).
5 May Children’s Day
27 May Buddha’s Birthday The KRW has been a floating currency since 1997, although the BoK may take appropriate
(Sat)
6 Jun Memorial Day measures to stabilise or smooth excessive volatility. The BoK started releasing the details of its
15 Aug Liberation Day FX market stabilisation measures on its website in March 2019.
28-30 Sep Chuseok
According to the Bank of Korea Act, maintaining price stability and financial stability are the
3 Oct National Foundation Day
primary objectives of the BoK’s monetary policy. The seven-member Monetary Policy
9 Oct Hangul Day
Committee within the BoK develops and implements monetary policy.
29 Dec Note: no settlement Since the Asian Financial Crisis in the late 1990s, South Korea has liberalised foreign exchange
Source: Bloomberg
regulations significantly. Along with the liberalisation of foreign currency transactions, South
Additional Information Korea has been moving towards a more open position on foreign direct investment (FDI). The
Bank of Korea primary legislation governing foreign investment is the Foreign Investment Promotion Act
www.bok.or.kr
Ministry of Economy and Finance
(FIPA). Non-residents may purchase property in Korea.
www.moef.go.kr
Refinitiv
KFTC18  The IMF classifies the de facto exchange rate arrangement as floating. The KRW is a fully
Bloomberg convertible currency, but it is only tradable on a NDF basis offshore.
APF
BOK Fixing mechanism
 The FX market is open from 0900 Seoul local time to 1530 Seoul local time and does not
close for lunch.
 The KRW fix is calculated using a weighted average of the onshore spot market (known as
the market average rate, or MAR) two business days prior to settlement. It is first posted
before 1500 Hong Kong local time (1600 Seoul local time) on the KFTC18 Refinitiv page on
the MAR day and officially published by 0830 Seoul local time the next day (one business
day prior to settlement). Market convention uses the fix two days before the value date, e.g.
value 28 April, fix 26 April.
 To trade off the fix rate for a particular day, the order must be passed on the MAR date
before the onshore market opens.
 ‘Korean cut’ currency options expire at 1430 Hong Kong local time, and refer to the MAR
(as published on Refinitiv at 1500 Hong Kong local time).
Background
 1965-80: USD-KRW was determined by a floating exchange rate mechanism.
 1980-89: USD-KRW exchange rate was fixed by the authorities.

 1990-97: Exchange rate was calculated using a trade-weighted, multi-currency basket.
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January 2023
 Since 1997: A floating exchange rate system with intervention limited to smoothing market
volatility was adopted.
 1999-2002: During this period, there were two main phases of FX liberalisation: the first
phase started in April 1999; the second phase started in January 2001.
 2002-05: On 16 April 2002, the government announced the “Plan for the Development of the
Korean Foreign Exchange Market” as the third phase of FX liberalisation. During this period,
the government eased regulations on FX transactions for individuals and companies.
 2006-08: The government announced plans in 2006 for further FX liberalisation through two
new stages. The first stage started in May 2006 with implementation completed in December
2007, whereby prior approval requirements for some capital account transactions were
abolished. In October 2008, the government announced that due to worsening market
conditions the second stage of the plan would be postponed for an indefinite period.
 December 2014: CNY-KRW direct trading market was established. According to the BoK,
by 2016, the market reached an average daily trade volume of USD2bn, about 14% of the
USD-KRW daily trade volume.
 March 2019: The BoK started releasing the details of its FX market stabilisation measures
on its website. Initially, its net purchase or sales of USD were aggregated over a six-month
period and released with a three-month lag. However, from December 2019 onwards, it will
make the disclosure on a quarterly basis. For example, 3Q19 intervention would be
released at the end of December 2019, 4Q19 intervention would be released at the end of
March 2020, and so on.
 June 2022: The MoEF said that it will soon allow foreign financial institutions to directly
participate in the domestic interbank market without establishing a presence in the country,
and extend the onshore market’s trading hours to 0200 local time (Bloomberg, 16 June
2022). On 30 September, Reuters reported that the government’s plan remains on track,
but implementation has been postponed.
Regulations
Onshore-onshore
 FX transactions and capital account transactions by individuals and corporations have been
liberalised. In addition, the remaining restrictions on FX transactions by financial institutions
are currently being streamlined.
 Financial institutional investors have access to the local forwards market and can hedge
their investment exposure without confirming the existence of the investment. Corporate
investors and individual investors are required to confirm the existence of the investment.
 Individuals and corporate residents can hold unlimited amounts of foreign currency in foreign
currency bank accounts. There is no ceiling on how much foreign exchange a foreign exchange
bank may sell to a resident. Korean firms can maintain foreign currency accounts abroad.
 There are prudential limits on the daily FX positions that a foreign exchange bank may hold.
The foreign exchange position of a foreign exchange bank is the difference between its foreign
currency assets and liabilities resulting from the trading of foreign exchange. Any over-bought
(or over-sold) foreign exchange positions must be within the amount equivalent to 50% of
capital as of the end of the previous month.
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January 2023
 Since October 2010, the authorities have been setting restrictions on forward positions for
FX derivatives of foreign bank branches (FBBs) and local banks that are registered as
foreign exchange banks. The limits are changed from time to time. Currently, the limits are:
 For FBBs, forward positions are capped at 200% of the previous month-end equity capital
 For local banks, forward positions are capped at 40% of the previous month-end
equity capital
 However, because of COVID-19, the authorities temporarily eased the FX forward

position limits in March 2020 – FBB: from 200% to 250% and local banks: from 40% to
50%. Normalisation of limits has not been clearly announced yet.
 Foreign currency hedging limits by corporate customers are 100% of customers’ exposure
or their transaction of underlying real assets.
 Since 1 August 2011, the government has imposed a bank levy on banks’ short-term non-
deposit liabilities for foreign currencies. On 1 July 2015, the bank levy was lowered to a flat rate
of 0.1% on the notional amount of non-deposit liabilities that have maturities below one year.
The purpose of the foreign exchange stability levy is to curb excessive foreign borrowing and to
encourage financial institutions to lengthen their foreign debt structures. The collected levies
are used to provide foreign currency financing to financial institutions in cases of crisis.
 The foreign currency liquidity coverage ratio (LCR) regulation is a system to strengthen foreign
exchange banks’ resilience against liquidity shocks and to promote the building of liquidity
buffers against short-term liquidity crises. A foreign exchange bank must have sufficient high-
quality liquid assets that can be easily converted into cash to meet its liquidity needs over a 30-
calendar day time horizon under conditions of significant liquidity stress. Since 2019, the
required LCR has been set at over 100% for local banks and over 60% for FBBs.
Offshore-onshore
 Non-residents may hold KRW locally through bank accounts, although some restrictions
regarding deposits and disposal of funds may apply.
 Except for foreign direct investment under the Foreign Investment Promotion Act (FIPA),
foreign portfolio investors (“Foreign Investor”) must open special investment purpose
accounts, which consist of an account exclusively for investment (“Foreign Currency Account
for Investment”) and a non-resident KRW account exclusively for investment (“KRW Account
for Investment”), at a foreign exchange bank when investing in securities in Korea. Foreign
Investors are permitted to open these special accounts at multiple banks in Korea.
 The amendments to the “Foreign Exchange Transaction Regulation” (FETR) in December
2007 enabled the following:
 Foreign Investors are allowed to freely convert foreign currency into KRW without any
underlying securities purchases as long as the converted funds are being transferred
from a Foreign Currency Account for Investment to a KRW Account for Investment.
 However, the converted funds in a KRW Account for Investment should still be used for
the purpose of securities investment.
 Foreign Investors can convert KRW proceeds into foreign currency on the day of the
sale of securities without the need to provide confirmation of the sale before the FX
transaction, while settlement is made after the actual receipt of KRW funds at a KRW
Account for Investment. The confirmation can be provided within three business days
from the date of the FX transaction.
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January 2023
 For foreign investors that have registered their personal details with the Financial
Supervisory Service (FSS), also known as Investment Registration Certificates (IRCs), sale
proceeds from the investment in securities can be freely repatriated. Sale proceeds
converted into foreign currency can be remitted overseas or held in onshore foreign
currency accounts.
 Banks may freely provide loans up to the amount of KRW1bn to non-residents. KRW-
denominated loans by institutional investors are permitted to be provided to non-residents
without limit on the amount, subject to the BoK’s approval. For loans up to KRW1bn, the
lender, who is a resident, should report to the BoK and for loans above KRW1bn, the
borrower, who is a non-resident, should report to the BoK.
Onshore-offshore
 Residents may hold foreign currency accounts domestically or abroad.
 Residents (individuals and corporates whose import/export performance in the preceding year
is less than USD5m) can remit up to USD50,000 per transaction for the purpose of overseas
deposits, upon reporting to the designated foreign exchange bank. However, when remitting
amounts greater than USD50,000, residents are required to report to the BoK.
 Institutional investors (including companies whose import/export performance in the
preceding year is more than USD5m) are allowed to do overseas remittance for the
purpose of overseas deposit without limit, subject to certain requirements of reporting to the
designated foreign exchange bank. All remittances should be made through the designated
foreign exchange bank. However, while there are no limitations on the amount that can be
invested, when investing in overseas real estate, residents are required to report the
transaction to the foreign exchange bank.
Offshore-offshore
 The offshore market is limited to NDFs.
Repatriation
 For foreign investors, there are no restrictions on remitting profits or dividends, although
reporting requirements may apply.
 There are no restrictions on the repatriation of capital, although reporting requirements
may apply.
 Under the FIPA, the remittance of the proceeds of the sale of shares must first be reported
to a bank designated by the MOTIE (Ministry of Trade, Industry and Energy).
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January 2023
Sri Lankan rupee (LKR)
 In normal times, the Central Bank of Sri Lanka (CBSL) operates a

floating exchange rate regime
 Since May 2022, the CBSL has started to publish a middle rate and
variation margin daily – all interbank trades are expected to be within
the range
 The LKR is only partially convertible on the capital account

Onshore average daily 
USD27m Spot FX
spot volume:
Onshore spot 
USD1.0-2.0m FX forwards
transaction:
Onshore bid/ask 25bp Spot
spread: (0.90LKR)
Onshore average daily The spot market opens at 0845 local time and closes at 1630 local time on weekdays, although
USD17m
forward volume: liquidity is sparse in the first and last 30 minutes of trading. There are 24 licensed commercial banks
Onshore forward
USD1m that participate in the spot market with only eight active participants offering two-way quotes, while
transaction:
200bp others participate occasionally. The liquidity is divided almost equally between the Refinitiv Dealing
Onshore forward
(0.50- System and the nine registered brokers. The average deal size in the spot market is USD1.0m and
spread:
4.00LKR)
the average turnover is USD17m per day.
developments.
Source: HSBC Forwards
FX forwards are permitted up to the tenor of the underlying trade or capital-related exposure.
The interbank market quotes up to one year; however, liquidity beyond six months can be
limited. Quotes in tenors out to two years are made on a case-by-case basis.
No offshore/NDF market is available.
Hedging through foreign exchange is allowed for the following transactions:

 Trade-related transactions
 Investments in debt securities and cash flows arising from equity market transactions
 Any party approved under the Foreign Exchange Act by the Director of the Foreign
Exchange Department
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January 2023
Note: Times given are Colombo local time = GMT + 5.5 hours
Source: HSBC

Duruthu Full Moon Poya
FX framework
6 Jan
Day
15 Jan Tamil Thai Pongal Day In normal times, the LKR operates under a floating regime with the Central Bank of Sri Lanka
Special Bank Holiday (in lieu (CBSL) intervening to curb excessive volatility in the currency.
16 Jan
of Tamil Thai Pongal Day)
4 Feb National Day Since the middle of 2021, liquidity in the FX market has been limited and there have been
5 Feb Navam Full Moon Poya Day changes to the operating model.
18 Feb Mahasivarathri Day
6 Mar Medin Full Moon Poya Day Since May 2022, the CBSL started to publish a middle rate of USD-LKR and a variation margin
5 Apr Bak Full Moon Poya daily. All interbank trades are expected to be within this range. The middle rate is the weighted
7 Apr Good Friday average rate of all actual USD-LKR spot transactions executed throughout the previous/latest
Day prior to Sinhala & Tamil available business day in the domestic interbank market.
13 Apr
New Year Day (Half day)
Sinhala & Tamil New Year Background
14 Apr
Day  In November 1977, the hitherto fixed rate LKR was devalued by 85%. From then until 2001,
Id-Ul-Fitr (Ramazan Festival
22 Apr it depreciated at an average annual rate of approximately 8% (in line with the inflation
Day)
1 May May Day differential) against the USD and other major trading currencies.
5 May Vesak Ful Moon Poya Day
 In January 2001, the CBSL ended the managed float regime that had been in place since
Day following Vesak Full
6 May
Moon Poya Day 1980 by allowing the LKR to float freely in an attempt to stabilise interest rates and protect
3 Jun Poson Full Moon Poya Day foreign currency reserves.
Id-Ul-Adha (Haji Festival
29 Jun  In February 2012, the CBSL moved away from intervening to keep the currency within a
Day)
Adh i- Esala Full Moon Poya soft band. The CBSL has indicated that it will only intervene to curb excessive volatility in
3 Jul
Day
the currency.
1 Aug Esala Full Moon Poya Day
30 Aug Nikini Full Moon Poya Day  In early September 2015, the CBSL moved away from guiding the market through the use
Milad un-Nabi (Holy of a reference rate and to give market forces a greater say in deciding the exchange rate.
28 Sep
Prophet’s Birthday)
The CBSL has indicated that it will intervene to curb excessive volatility in the currency, as
29 Sep Binara Full Moon Poya Day
well as provide liquidity for large offshore exits from Government of Sri Lanka securities.
28 Oct Vap Full Moon Poya Day
12 Nov Deepavali Festival Day  In mid-2017, the CBSL completely did away with guiding the market through a reference
26 Nov Il Full Moon Poya Day rate. The spot rate is now dependent on USD-LKR supply and demand. The CBSL has
25 Dec Christmas Day indicated that it will only intervene to curb excessive volatility.
Unduvap Full Moon Poya
26 Dec
Day  In September 2021, the CBSL issued a circular stating a guidance range for USD-LKR
Source: CBSL Sri Lanka
between 200-203. Trades outside this range were no longer allowed. This regulation was
rescinded in March 2022.
Central Bank of Sri Lanka
www.cbsl.gov.lk  In May 2022, in order to manage the exchange rate’s volatility, the CBSL issued a set of
Ministry of Finance and
Planning operating instructions to all licensed banks to use a middle rate published by the CBSL
www.treasury.gov.lk daily in relation to interbank transactions with a separate variation margin on either side.
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January 2023
Repatriation
 All share-related transfers and fixed income-related transactions routed through Inward
Investment Accounts (IIA) may be conducted without the Department of Foreign
Exchange’s (DFE) approval.
 For the remittance of dividends, tax clearance must be obtained, confirming that withholding
tax has been paid.
 All proceeds received from the sale, transfer or maturing of Treasury bills and bonds and
interest income from such investments by offshore investors can be repatriated when
routed through IIA.
 All maturity proceeds on Special Foreign Investment Deposit Accounts, which have been
re-designated as IIA, can be repatriated.
 Any other type of capital transfer needs to be aligned with the new Foreign Exchange Act;
any deviations require approval from the regulator.
Regulations
 As a signatory of IMF Article 8, Sri Lanka has relaxed all current account transactions and
removed exchange controls for current account transactions (trade- and service-related).
Further, the issuing of USD-denominated sovereign bonds, the opening of the LKR bond
market to foreigners, and regular comments from the CBSL illustrate the efforts to further
liberalise the capital account.
 The introduction of the new Foreign Exchange Act has provided further clarifications and
detailed explanations of the types of capital transactions that can take place.
 Foreign investors and corporations have access to FX spot, forwards and FX options markets.
 Export proceeds can be maintained in a Business Foreign Currency Account (BFCA).
 FX forwards are allowed for hedging against stock market-related transactions up to the
settlement date of the purchase or sale of shares for settlements that must be routed through IIA.
 Hedging of LKR bond investments by offshore funds using FX forwards is allowed by the
regulations. FX forwards can be used for hedging of principal and coupons and these
hedges can be unwound, if needed.
 Local subsidiaries are allowed to cover foreign exchange up to the extent of the underlying
exposure, backed by documents confirming the underlying exposure (i.e. import cover).
 Investments in securities listed on the Colombo Stock Exchange do not require approval,
provided the transactions are routed through IIA.
 Foreign investors are eligible to purchase government securities (Treasury bills and bonds)
with a cap of 5% of the total amount issued. Eligible investors are offshore country funds,
mutual funds or regional funds approved by the Securities and Exchange Commission of Sri
Lanka, and corporate bodies incorporated outside Sri Lanka and citizens of foreign states. All
investments and repatriation of proceeds should be routed through IIA. They are also able to
invest in deposits in domestic banking units through IIA. Deposits can be made in the form of a
time deposit or a savings deposit in any designated foreign currency or LKR.
 Overdraft facilities: Local subsidiaries of foreign corporations are allowed to overdraw local
currency but not foreign currency in onshore operations. An overdraft facility, and issuance
of cheque books on IIA is prohibited, according to current CBSL regulations.
 Foreign currency banking unit (FCBU) accounts are allowed to be overdrawn in USD.
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January 2023
Others
 Inward Investment Swap Facility – Sri Lanka offers one- to two-year USD-LKR swap
facilities to help minimise foreign exchange risk when investing in local financial assets. Sri
Lanka will allow conducting the initial foreign exchange transaction and subsequent
exchange transactions at the same exchange rate.
 In the event of selling government securities prior to their maturity, permission is to be
granted to exchange them at the prevailing foreign exchange rate, subject to a penalty of
0.25%. This facility is applicable only if there is foreign exchange inflow to the country and
subject to a minimum investment of USD25m and a maximum of USD1bn.
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January 2023
Taiwan dollar (TWD)
 The Central Bank of the Republic of China (Taiwan) (CBC) operates

a managed floating currency regime and regularly intervenes to
smooth volatility
 The TWD is not fully convertible and any onshore spot transaction
must be declared to the CBC
 The offshore NDF market is generally liquid with an estimated daily
turnover of USD4-6bn
Normal Market Conditions The Taiwan dollar is actively traded with the following products available:
Average daily spot  Spot FX16
USD3-4bn
volume:
Spot transaction: USD3-5m  Offshore non-deliverable forwards out to 10 years
Spot bid/ask 5 pips (0.005TWD)  FX options out to five years and further on a case-by-case basis
spread:
 Cross-currency swaps out to 10 years17
Average daily NDF
USD4-6bn
volume:  Interest rate swaps and local fixed income
NDF transaction: 1M: USD20m
 Domestic money market products
NDF bid/ask 1M: 10-20 pips
spread: (0.010-0.020TWD)
Average daily Spot
USD2-3bn
forward volume: The onshore market opens at 0900 Taipei local time, closes for lunch between 1200 Taipei local
Forward transaction: USD20-50m time and 1400 Taipei local time, and then closes at 1600 Taipei local time.
2-10 pips (0.002-
Forward spread:
0.010TWD)
Average daily Forwards/FX swaps
USD500m
options volume: The TWD trades in the offshore market as a USD-settled non-deliverable forward (NDF). The
Average options
USD30m offshore NDF market is generally liquid with an estimated daily turnover of USD4-6bn.
transaction:
Implied option
3M: 0.4-0.5 vol In Taiwan, NDFs were suspended from trading in May 1998 and domestic authorised banks
volatility spread:
Note: Spreads are subject to change with market were only permitted to enter NDFs with other domestic authorised banks and the overseas
developments.
Source: HSBC branches or head offices of authorised banks. However, the CBC deregulated such restrictions
by allowing local banks’ overseas branches to resume trading NDFs, subject to regulatory
approval, with effect from 9 September 2014.
Options
Offshore USD-settled non-deliverable options (NDOs) are available out to five years and further
tenors are available on a case-by-case basis. A range of FX structured products is also
16 Onshore spot transactions must be declared to the CBC and, in some cases, require supporting documentation.
17 Offshore swaps are non-deliverable. Fully deliverable swaps are available onshore.
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January 2023

Note: Taipei local time = GMT + 8 hours
Source: HSBC
FX framework
2 Jan Republic Day holiday
22 Jan Working Day
 The TWD operates under a managed floating regime with the CBC regularly intervening in
27-28 Feb Peace Memorial Day the spot market to smooth volatility. The CBC is also responsible for establishing Taiwan’s
holidays monetary policy; it has independence in setting monetary policy.
3-5 Apr Children’s Day, Qing Ming
Festival Convertibility
1 May Labour Day
 Since the TWD is not fully convertible, any onshore spot transactions must be declared to
22-23 Jun Dragon Boat Festival
29 Sep Mid-Autumn Festival the CBC and, in most cases, require supporting documentation.
9-10 Oct National Day holidays  Offshore, the TWD trades as a USD-settled NDF.
Source: Bloomberg
 Taiwan maintains numerous restrictions on foreign investment, although there have been
Central Bank of the Republic of
recent moves towards easing some of these restrictions. The Statute for Investment by
China (Taiwan) Foreign Nationals and Overseas Chinese outlines which industries are open to investment
www.cbc.gov.tw and the requirements for investing in them. In general, the sectors that are off limits to
Bureau of Foreign Trade
www.trade.gov.tw foreign investors are those related to national security or businesses that may compromise
Investment Commission, MOEA the well-being of the Taiwanese people, either physically or morally. Otherwise, foreigners
www.moeaic.gov.tw
and Taiwanese nationals receive equal treatment.
Ministry of Finance
www.mof.gov.tw  Taiwan does offer some investment incentives, which are granted under the Statute for
Financial Supervisory Commission
www.fsc.gov.tw/en/index.jsp Industrial Innovation. Eligible investors must apply to the Investment Commission of the
Refinitiv Ministry of Economic Activities, if they wish to enrol in any of the incentive programmes.
TAIFX1
Bloomberg Foreign entities may acquire 100% of a local enterprise.
APF
Fixing mechanism
 The TWD fix is a snapshot of the onshore market price at 1100 Taipei local time two
business days prior to the value date, e.g. value 28 April, fix 26 April.
 ‘Taipei cut’ options expire at 1100 Hong Kong local time.
Background
 Before 1978, the TWD was pegged to the USD.
 From 1978 to 1989, a managed floating rate regime with fluctuation limits was in place.
 From 1989, the CBC abolished the mid-rate system and planned liberalisation.
 Qualified foreign institutional investor (QFII) requirements were abolished in October 2003.
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January 2023
Regulations
Restrictions have been eased on remitting and repatriating capital but most currency controls
remain in effect.
Since 2003, foreign investors have been classified as ‘foreign institutional investors’ (FINIs) and
‘foreign individual investors’ (FIDIs). Both are required to register with the Taiwan Stock
Exchange (TSE). Both FINIs and FIDIs have unlimited investment quotas.
Most FX swap transactions do not require documentation or the CBC’s approval. Swaps for
inter-company loans and forwards, however, need supporting documents. Spot deals above
TWD500,000 plus all forwards and swaps require the completion of an original “Declaration
Statement of Foreign Exchange Receipts and Disbursements or Transactions” form bearing a
company seal. Banks are required to confirm that the required supporting documents comply
with the Declaration Statement for remittance by a company/an individual for an amount equal
to or greater than USD1m/USD500,000, respectively.
Onshore-onshore
 There are no limits on the TWD’s trading range versus other currencies, but there are
convertibility limits on the capital account.
Offshore-onshore
 Only onshore entities have access to onshore markets.
 Only FINIs, FIDIs and local registered entities (with supporting documents) can deal FX onshore.
 Local customers, FINIs and FIDIs, and foreigners through a domestic agent with
clarification documents or regulator’s approval have access to the local forwards market.
 Access to foreign exchange is divided into three categories:
 import and export
 cost of trade-related services
 investments, capital repatriation, and dividends
 Currency options are permitted.
 The TWD market is regulated with documentary proof required for FX transactions onshore
where the amount is equal to or greater than USD1m (for companies) or USD500,000 (for
individuals). For FINIs/FIDIs, all transactions must be documented regardless of the amount.
Onshore-offshore
 Foreign-owned companies must apply to the Foreign Exchange Department of the CBC
and the Investment Commission at the Ministry of Economic Affairs simultaneously to
secure approval for borrowing from abroad.
 Since 22 April 2015, investment by FINIs and FIDIs in government bonds, corporate bonds,
bank debentures and money market instruments should not exceed 30% of net remitted-in
funds. From 13 March 2017, investments into privately placed convertible corporate bonds are
excluded from the aforementioned limit.
Offshore-offshore
 The offshore market is limited to NDFs.
 On 9 September 2014, the CBC allowed local banks’ overseas branches to participate in
the TWD NDF market with immediate effect. These banks will also be subject to the existing
cap on net NDF positions, at 20% of each bank’s FX position (last revised lower from 33%
in December 2010).
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January 2023
Repatriation
Interest and principal
 There are no restrictions on remittances of interest and principal, if the original loan has
been approved.
Dividends and profits

 For investments conducted pursuant to the Statute for Investment by Foreign Nationals
(SIFN), 100% of dividends and net profits may be remitted without restrictions.
Capital
 With proper supporting documents, investment income, including capital gains and
interest/dividend income, can be repatriated after the appointment and subsequent
concurrence of a tax guarantor.
FINIs/FIDIs
 For outward remittances in Taiwan, not all cash balances can be repatriated automatically.
Currently, FINIs and FIDIs are allowed to repatriate their ‘principal’ amount freely
(principal amount is the difference between the total accumulated inward remittance and
outward remittance).
 However, if the balance consists of ‘earnings’ (investment income, including capital gains,
dividend income, interest and other income), it can only be effected after a tax guarantor in
Taiwan has been appointed by the FINI and the FIDI and the repatriation amount has been
approved by the tax guarantor/agent.
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January 2023
Thai baht (THB)
 The Bank of Thailand (BoT) operates a managed floating currency

regime and intervenes as needed to reduce volatility
 The THB is deliverable and largely convertible
 The BoT is making regulatory changes to advance its New Foreign
Exchange Ecosystem Development Plan

Average daily spot 
USD1bn Spot FX
volume:
Spot transaction: USD1-3m  FX forwards out to five years18 and out to 20 years on a case-by-case basis
Bid/ask spread: 1-2 pips
 Onshore and offshore FX options out to three years and further tenors on a case-by-case basis
Average daily forward
>USD1.5bn
volume:
 Cross-currency swaps out to 10 years and out to 20 years on a case-by-case basis
Average O/N and
>USD1.5bn
T/N funding: 
Average daily swap
Interest rate swaps and a full line of domestic fixed income and money market products
USD20-30m
transaction size
Spot
Forward Up to 3M: 2-4 pips
spread: 6-12M: 4-6 pips The FX market is the most competitive market in Thailand with full participation by all onshore
Average daily USD0.02-0.1bn banks and, at times, offshore banks as well. Daily turnover is around USD1bn with the Bank of
options volume: Thailand (BoT) playing an important role in influencing the size and liquidity of the market due
Average options USD20m to onshore-offshore dealing regulations.
transaction:
Implied option 3M: 1.5 vol Forwards/FX swaps
volatility spread: There is good liquidity in the FX forwards market out to one year with the best liquidity in tenors
Note: Spreads are subject to change with market of up to one year.
developments.
Source: HSBC
Since there is no effective interbank cash market in Thailand, the foreign exchange forwards
market is widely used in determining THB short-term interest rate benchmarks among banks.
Restrictions preventing forward USD purchases onshore without underlying assets result in an
ongoing offshore deliverable forwards market.
Options
Currency options are available out to three years – with the best liquidity in tenors of up to one
year – and further on a case-by-case basis in both onshore and offshore markets. Liquidity in
options are the best during Asian trading hours. A range of FX structured products is also
Currency swaps and bonds

Cross-currency and interest rate swaps are available both onshore and offshore out to 10 years,
although the onshore market is more liquid. The BoT launched the Thai Overnight Repurchase
Rate (THOR) in April 2020, as a new reference rate to replace THBFIX (the synthetic rate for
borrowing THB, via borrowing the USD and swapping the USD for THB), which will be
18 Non-residents may only access the local forwards market with underlying trade/investment business.
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January 2023

Note: Bangkok local time = GMT + 7 hours
Source: HSBC
discontinued in mid-2023. Interest rate swaps referencing THOR are available for tenors up to
10 years, and liquidity is improving.
(observed)
6 Mar Makha Bucha Day FX framework
6 Apr Chakri Day
13-15 Apr Songkran Festival Exchange rate mechanism
1 May National Labour Day  The THB is a managed floating currency managed by the BoT, the Kingdom’s central bank.
4 May Coronation Day The BoT is also responsible for establishing and implementing monetary policy (through
5 Jun H.M. the Queen’s Birthday
(observed)
inflation targeting and a policy interest rate) and administering FX regulations.
28 Jul H.M. the King’s Birthday  The BoT does not target the exchange rate at any specific level but monitors and oversees the
1 Aug Asarnha Bucha Day
exchange rate movements to be in line with economic fundamentals and not too volatile as it
14 Aug H.M. the Queen Mother’s
Birthday (observed) might deter economic sector adjustment and cause severe adverse impacts on the economy.
13 Oct H.M. the Late King’s
Memorial Day  The BoT intervenes, as it deems appropriate, through both spot and forward transactions.
23 Oct Chulalongkorn Day
Convertibility
5 Dec H.M. the Late King’s
Birthday & National Day  The THB is largely convertible and has a relatively liquid spot market. FX forward
11 Dec Constitution Day transactions executed with onshore banks must have legitimate underlying business in
Source: Bank of Thailand
Thailand with supporting documentary evidence (e.g. invoice or loan agreement).
 The Kingdom’s government has long maintained an open environment for foreign
Bank of Thailand
www.bot.or.th investment, though there are restrictions on foreigners investing in industries that are
Ministry of Finance considered vital to Thailand’s national security and interests.
www.mof.go.th
Board of Investment Background
www.boi.go.th
 1945-78: Fixed parity system against the USD.
Securities and Exchange
Commission
 1978-84: Trade-weighted basket before fixing to USD parity in 1981.
www.sec.or.th
Joint Foreign Chambers of 
Commerce in Thailand
1985-97: The THB closely managed against a basket of currencies with the USD making up
www.jfcct.org an estimated 80% of the basket.
 15 May 1997-30 January 1998: Non-residents were not allowed to deal THB spot with
onshore banks, resulting in a two-tier FX rate system.
 July 1997: The THB floated after speculative attacks on the currency basket peg forced the
central bank to use up most of its foreign reserves.
 18 December 2006-29 February 2008: The BoT issued capital control directives,
temporarily imposing a 30% reserve requirement on non-resident entities selling foreign
currency for THB to curb speculative capital inflows.
 Since 2015, the BoT has been focusing on measures to liberalise capital outflows channels
for residents (Capital Account Liberalisation Master Plan).
 Since 2020, the BoT has been advancing its New Foreign Exchange Ecosystem
Development Plan. The BoT said it wants to address the structural problems of Thailand’s
foreign exchange market by relaxing foreign exchange regulations. The aims include: i)
more balanced capital flows; (ii) an exchange rate flexible in both directions driven by
market forces; and (iii) greater access to FX hedging instruments with lower costs (from
more competition among providers) for businesses.
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January 2023
Repatriation by non-residents
 Repatriation of capital, repayment of loans and interest, and inward/outward remittance
of funds for equity investment are permitted, subject to the presentation of relevant
supporting documents.
Non-resident THB accounts

 Since 3 March 2008, the BoT segregated non-resident THB accounts into two types:
 Non-resident Baht Account (NRBA) – this account is used for general transactions in
accordance with exchange control regulations, such as trade, services, direct investment (10%
shareholding), properties, loans and other transactions.
 Non-resident Baht Account for Securities (NRBS) – this account is used for investment in
securities and financial instruments, debt instruments, unit trusts, financial derivatives
transactions traded on TFEX or AFET, including sales proceeds, returns and related payments
for such investments.
 Deposits from Thai residents to NRBS and NRBA require the submission of supporting
documents.
 Withdrawals from NRBS and NRBA to Thai residents require a purpose of payment code.
 Transfer of funds from NRBS to NRBS and NRBA to NRBA do not require supporting
documents.
 Fund transfers between NRBS and NRBA are not allowed.
 Interest is prohibited from being paid to both NRBA and NRBS (saving and current). There is
an exception for NRBA fixed deposits with a tenor of at least six months.
 The outstanding balance (at the end of day) of NRBS and NRBA opened by a non-resident
with all onshore banks must not exceed a total sum of THB200m for each type of account.
Prior BoT approval is required for having outstanding amounts in excess of THB200m. In this
regard, onshore banks are also required to report the outstanding balance of non-resident THB
accounts maintained with them to the BoT. The limit was lowered from THB300m with effect
from 22 July 2019.
Hedging by non-residents
 Hedging by offshore non-residents with onshore institutions must comply with the BoT’s
guidelines, some of which may require supporting documents and/or direct BoT approval.
 Projection hedging by non-residents is generally not allowed onshore, except with the
BoT’s approval.
Transactions in which non-residents buy THB and sell applicable foreign currencies
 Non-residents are freely allowed to buy THB and sell foreign currency for value spot (T+2),
and the BoT’s approval is not required.
 For transactions with underlying trade or investment in Thailand (requiring evidence), a non-
resident is allowed to sell foreign currency against THB for value same day or next day
without requiring prior permission from the BoT.
 For transactions without underlying trade or investment, the outstanding balance (inclusive
of all transactions regardless of maturities, which result in providing THB liquidity to
non-residents without underlying trade executed with each financial institution shall not
exceed THB200m per group of non-residents. This limit was lowered from THB600m on
5 January 2021.
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January 2023
 Transactions classified as onshore banks providing THB liquidity to non-residents (NR)

include:
 NR’s direct borrowing of THB
 THB overdrafts (O/D) provided by FIs
 NR sells FCY and buys THB (without underlying exposure) at less than the spot
value date (i.e. T+0, T+1)
 NR transactions (without underlying exposure) that are equivalent to buying FX

(and selling THB) in the future, such as buy USD-THB outright forward, and
sell/buy FX swap and FX options
 For FX forward transactions, there is no restriction on non-residents selling foreign currency

forwards with underlying trade or investments in Thailand (requiring evidence). The forward
transaction is required to be regularly marked to market and, if the value of the underlying trade
or investment falls below the value of the forward, the position must be adjusted accordingly.
 With effect from 22 July 2019, the names of end-beneficiaries behind non-residents’ holdings
of THB bonds are required to be reported. The BoT also announced on 20 November 2020
that investors would be required to complete a registration process prior to investing in Thai
debt securities – Bond Investor Registration (BIR). The regulations require commercial banks
providing custody services to arrange for their non-resident clients, who invest in debt
securities in Thailand, to open a Segregated Securities Account (SSA) at the Ultimate
Beneficial Owner (UBO) level and register for authentication with the BoT by 4 January 2022
and from then onwards, trading of debt securities must be settled through the SSA registered
with the BoT only.
Transactions in which non-residents sell THB and buy FCY

 Non-residents are freely allowed to sell THB and buy foreign currency for value spot (T+2),
and the BoT’s approval is not required.
 For transactions without underlying trade or investment, the outstanding balance (inclusive
of all transactions regardless of maturities, which result in taking THB liquidity from non-
residents without underlying trade or investment) executed with each local financial
institution must not exceed THB10m per group of non-residents.
 Transactions classified as non-residents (NR) lending THB to onshore banks include:
 NR’s direct lending
 Issuance of short-term THB instruments by onshore banks to NR
 NR buys FCY and sells THB (without underlying exposure) at less than the spot
value date (i.e. T+0, T+1)
 NR transactions (without underlying exposure) that are equivalent to selling FCY

(and buying THB) in the future, such as sell USD-THB outright forward, and
buy/sell FX swap and FX options
 Non-residents are allowed to sell THB, derived from THB securities transactions, held in or to be
deposited into NRBS with spot value or any other values (i.e. forward or less than spot) without
any restriction, provided that the settlement of the FX transaction is aligned with the securities
settlement date. However, in the case where there is a discrepancy between settlement date of
the FX transaction and the securities settlement date, the FX transaction must be conducted on
a spot basis (T+2), otherwise, the FX transaction would be considered as one without underlying
and, therefore, subject to the THB10m limit per group of non-residents.
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January 2023
 Non-resident customers may enter into forward transactions to sell THB and buy foreign
currency with onshore banks, but the amount of such forward transactions shall not exceed
the value of the underlying THB trade or investment in Thailand. The forward transaction is
required to be regularly marked to market and, if the value of the underlying trade or
investment falls below the value of the forward, the position must be adjusted accordingly.
Non-Resident Qualified Company (NRQC) Scheme

 The BoT launched a Non-Resident Qualified Company (NRQC) Scheme on 5 January 2021.
Non-resident companies that are not financial companies and which have trade and direct
investment in Thailand are encouraged to participate in the NRQC Scheme to enjoy greater
flexibility to conduct their FX transactions against the THB with domestic financial institutions.
In other words, many of the afore-listed FX regulations for non-residents may not apply to
NRQCs. Basically, NRQCs will be able to manage their FX and THB risks more freely without
having to provide proof of underlying for each transaction. The scope of eligible underlying
transactions will also be broadened to include anticipatory hedging and balance sheet
hedging. Moreover, NRQCs will be able to manage their THB liquidity more flexibly without
being subject to the end-of-day outstanding limit of THB200m imposed on NRBAs.
 Since the NRQC Scheme will facilitate non-resident companies to engage in foreign
exchange transactions with domestic financial institutions more freely, the outstanding limit
on THB liquidity that domestic financial institutions may provide to non-residents without
proof of underlying was thus reduced (from THB600m to THB200m) as this channel was
deemed to become less necessary. According to the BoT, the reduction of the limit will also
encourage more non-resident companies to participate in the NRQC Scheme.
Repatriation of export proceeds by residents

 It used to be the case that all exporters have to repatriate their foreign currency proceeds within
12 months. However, with effect from 2 March 2020, the BoT said that exporters with foreign
currency proceeds below USD1m per bill of lading will be allowed to keep those proceeds
abroad, without a time limit. That would encompass 80% of Thailand’s exports, according to the
BoT. This was a relaxation from the previous USD200,000 threshold that came into effect on 8
November 2019. And, prior to that, the exemption limit was just USD50,000 per shipment.
 Exporters with foreign currency proceeds exceeding the USD1m (per bill of lading)
threshold will be allowed to use the revenues to offset foreign currency expenses, without
having to repatriate the funds first. Exporters can simply register with the BoT and provide
necessary documentation to commercial banks, without prior approval from the BoT.
Resident FCY deposit account

 Residents may now deposit funds in, and transfer funds between, their Foreign Currency
Deposit (FCD) accounts for purposes that do not require the BoT’s approval (Negative List).
There will be no maximum limit and the presentation of supporting documents is not required
The limit and regulations on FCD were relaxed on 20 November 2020.
 The interest received from such deposits may be subject to Thailand’s tax regulations.
 Withdrawal of FCY in order to transfer it abroad must be for a payment for obligations according
to the existing BoT regulations.
Settlement of gold trading in foreign currency

 With effect from 8 November 2019, Thai investors will be allowed to trade gold in foreign
currencies (through FCY deposit accounts opened with onshore commercial banks) with
designated gold trading companies that have received approval from the BoT. Previously,
such transactions could only be done in THB. Investors are also able to keep foreign
currency proceeds from gold investments in FCY deposit accounts, without having to
exchange these into THB for subsequent purchases.
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January 2023
Outward fund transfer from Thai corporates to lend or invest in offshore corporates
(direct investment)
 Thai corporates are allowed to lend an unlimited amount of foreign currencies to offshore
companies. Lending THB to offshore corporates is not allowed.
 Thai corporates can make an unlimited amount of direct investment (i.e. resulting in such
Thai corporates holding at least 10% of the total paid-up shares of an offshore corporate) in
offshore affiliated corporates. Such investment must be made in foreign currency.
Outward fund transfer from Thai institutions/individuals to invest in overseas securities

(portfolio investment)
 Thai corporates that have total assets of at least THB5bn and Thai corporates that are
listed on the Stock Exchange of Thailand (SET) are classified as institutional investors and
are allowed to invest in overseas securities/instruments and execute derivatives not related
to THB with offshore institutions. Currently, there is no regulatory limit for this type of
institutional investor for the purpose of overseas portfolio investment.
 Other types of Thai institutional investors that are also allowed to invest in overseas
securities/instruments include government pension funds, social security funds, provident
funds, mutual funds (not including private funds), securities companies under SEC ACT B.E.
2535, insurance companies (both life and non-life), specialised financial institutions, and
Derivatives businesses operators under Derivatives Act B.E. 2546. The permitted investment
amount is subject to the regulator’s approval of each type of institutional investor.
 Since October 2012, the definition of permitted overseas securities/instruments was
widened to include foreign currency-denominated debt instruments issued by the Thai
government, Thai entities, foreign governments, international organisations or foreign
entities, which are issued and offered in Thailand as permitted by the Securities and
Exchange Commission (SEC) and the BoT.
 Thai institutional investors must execute FCY-THB hedging contracts with onshore banks to
hedge FCY-THB exposure arising from their investment in overseas securities. These
hedging contracts can be unwound, provided the institutional investors do not intend to
speculate in the FCY-THB rate.
 With effect from 8 November 2019, all retail investors are allowed to invest in foreign
securities directly, without having to go through local intermediaries.
 With effect from 8 November 2019, investors that have less than THB50m of financial
assets can invest up to USD200,000 per year in foreign securities directly. That limit
was raised to USD5m year on 20 November 2020.
 The investment shall be in the securities issued or distributed in ASEAN member

countries, or countries where the supervisory agency is a member of the International
Organization of Securities Commissions (IOSCO) and is designated on the Signatory A
List of the Multilateral Memorandum of Understanding Concerning Consultation and
Cooperation and the Exchange of Information (MMoU).
 The aggregate investment limit allocated to all investors regulated by Thailand’s SEC was
abolished on 20 November 2020. Previously, from 8 November 2019 to 19 November 2020,
the limit was USD150bn and, prior to that, the limit was USD100bn.
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January 2023
Outward fund transfer from Thai institutions/individuals for purposes other than direct
and portfolio investments
 With effect from 8 November 2019, outward transfers will be allowed freely except for a few
specific purposes, such as for settlement of FX/THB transactions with financial institutions
abroad. This is a ‘negative list’ approach, as opposed to the previous ‘positive list’ (of
specific purposes) approach.
 Individuals who wish to relocate abroad or transfer funds to relatives abroad are able to do
so freely. Those who wish to purchase real estate abroad will now be allowed to do without
limit. This was changed from a USD50m cap per year in April 2022.
 With effect from 13 May 2022, submission of supporting documents for the purchase of
foreign currency of Thai customers that have undergone the Know-Your-Business process
(KYB) of the selling commercial banks is repealed. For Thai customers that have not
undergone KYB, supporting documents will be required for a transaction worth
USD200,000 or more. In addition, the KYB framework is applied on the submission of
documents when entering into other transactions, including the lending or withdrawal of
foreign currency. The exemptions to the KYB process are: 1) sending foreign currency back
to the country (repatriation), and 2) depositing of THB into THB accounts of non-residents.
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January 2023
Procedural guidelines for authorised banks undertaking FX

transactions, according to Thailand’s measures, to prevent THB
speculation
Notes and table key

Scope
Transaction being THB related with non-resident counterparty
R
Residents
NR
Non-residents
Underlying
Trade and investment in Thailand done by NR

Permitted without prior BoT approval required
X
Not permitted
@
Requires BoT approval
[U]
Allowed but must not exceed underlying value
[Lend 200]
Allowed but total outstanding balance undertaken by each onshore bank (in aggregate of all
kinds of lending activities) must not exceed THB200m per group of NR
[Borrow 10]
Allowed but total outstanding balance undertaken by each onshore bank (in aggregate of all
kinds of borrowing activities) must not exceed THB10m per group of NR
89
January 2023
Non-derivatives transactions
Transactions Underlying No underlying Exception/Condition
1. Lending THB to NR
1.1 Bank lends THB directly X X Except
 Personal consumer loan for NR having a valid work permit for at
least one year. The amount must not exceed THB5m.
 Loan to NR juristic person, which is not a financial institution, for the
purpose of investing in Thailand, not inclusive of investments in real
estate and securities listed on the SET or MAI.
 Loan to NR incorporated in Greater Mekong Sub-region1 (GMS)
countries for financing infrastructure and industrial projects carrying
on in the GMS countries. Such investment must bring about benefits
to Thailand.
 Issuance of credit cards to NR.
1.2 Bank provides THB O/D ___________ [Lend 200] ____________

1.3 Bank lends through Repurchase Agreement X X
[Repo] or sell and buy-back transactions
1.4 Bank buys THB debt instruments issued by X X Except
NR  Purchase of THB bond issued by NR who is granted an approval
from the Ministry of Finance (MoF) to issue such THB bonds.
1.5 Bank issues THB guarantee for NR X X Except
 Issuance of bid bonds, performance bonds or letters of guarantee for
NR who has contracts with Thailand’s government, Thai state
enterprises, or Thai juristic persons.
 Guarantee of THB bonds issued by NR residing in one of the GMS
countries who has obtained the approval from the MoF to issue such
THB bonds.
2. Borrowing THB from NR
2.1 Bank borrows THB [U] [Borrow 10] Except
 Except for offshore banks that have obtained approval from the MoF
to issue THB bonds.
 Underlying in this case shall include banks’ lending to residents.
2.2 Bank borrows THB through repurchase X X

agreement, sell and buy-back transactions, or
any similar transactions (including securities
borrowing and lending)
2.3 Bank issues THB debt instruments to sell to ___________ [Borrow 10] ____________  Including THB Negotiable Certificate of Deposit issued to NR.
NR (excluding B/E [Bill of Exchange])
2.4 Bank issues THB B/E to borrow from NR X X  Issuance of THB B/E to NR is not allowed regardless of the maturity.
3. Buying and selling FX/THB with NR
3.1 Bank buys FX sells THB for Value spot (T+2)  
3.2 Bank buys FX sells THB for Value same [U] [Lend 200]
day/Value next day
3.3 Bank sells FX buys THB for Value same [U] [Borrow 10]
day/Value next day
4. NR THB accounts
4.1 NRBA (general purpose) @ Outstanding balance at  Except in the case that NR, who is the owner of the NRBA, has to
the end of day must deliver THB due to an obligation related to trade or investment in
not exceed THB200m Thailand on the next business day. In this case, FI shall verify
documents related to such obligation and monitor the portion of
outstanding balances that exceeds the end-of-day account balance
limit to ensure that it does not exceed the underlying value.
 NR enrolled in the NRQC Scheme exempted.
4.2 NRBS (securities investment) @ Outstanding balance at  Except in the case that NR, who is the owner of the NRBS, has to deliver
the end of day must THB due to an obligation related to investment in securities or financial
not exceed THB200m instruments in Thailand on the next business day. In this case, FI shall
verify documents related to such obligation and monitor the portion of
outstanding balances that exceeds the end-of-day account balance limit
to ensure that it does not exceed the underlying value.
1 Republicof the Union of Myanmar, Kingdom of Cambodia, Lao People’s Democratic Republic, Socialist Republic of Viet Nam, and the People’s Republic of China (specifically Yunnan Province).
Note: For any other kinds of transactions, please consult the BoT Anti-THB Speculation Team at 02 283 5326 7, 02 356 7639 prior to undertaking such transaction. (Unofficial English translation)
Source: BoT, HSBC
90
January 2023
Derivatives transactions
Transactions Underlying No underlying Exception/Condition
1. Derivatives linked to FX rate and index
1.1 Plain vanilla and structured derivatives,
according to the BoT’s notification
(1) Bank’s transaction that is equivalent to [U] [Borrow 10] Underlying in this case shall include
buying FX in the future, such as buy FX/THB  Transactions where a bank sells FX outright forward to residents.
outright forward, sell/buy swap and FX option
 FX option transactions, which may result in selling FX to residents in
the future.
(2) Bank’s transaction that is equivalent to [U] [Lend 200]
selling FX in the future, such as sell FX/THB
outright forward, buy/sell swap and FX option
1.2 Derivatives beyond the scope of the BoT’s @ @
notification
2. Derivatives linked to interest rates and index
2.1 Plain vanilla and structured derivatives,  
according to the BoT’s notification
2.2 Derivatives beyond the scope of the BoT’s @ @
notification
3. Debt instrument derivatives
(1) Bank buys or sells bond forward with NR X X
(2) Bank buys or sells bond option with NR X X
4. Equity derivatives, according to the BoT’s notification
(1) Physical settlement  
(2) No physical settlement   Condition:
 Bank must pay NR in FCY equivalent
5. Credit derivatives, according to the BoT’s notification

(1) Unfunded credit derivatives (such as credit   Condition:
default swap)  Banks must pay NR in FCY equivalent
(2) Bank lends THB to NR through funded credit X X

derivatives (such as credit-linked note)
(3) Bank borrows THB from NR through funded __________ [Borrow 10] ___________
credit derivatives (such as credit-linked note)
6. Derivatives linked to other kinds of asset and variable
@ @
7. FX/THB non-deliverable forward: NDF
X X Except
 Transaction executed to roll over or unwind earlier transactions due
to the failure of clients/counterparty to deliver/settle the full amount of
the contract.
Note: For any other kinds of transactions, please consult the BoT Anti-THB Speculation Team at 02 283 5326 7, 02 356 7639 prior to undertaking such transaction. (Unofficial English translation)
Source: BoT, HSBC
91
January 2023
Vietnamese dong (VND)
 The State Bank of Vietnam (SBV) maintains strict currency controls

and manages the VND tightly, using a daily fixing and trading band
 Most FX transactions are conducted onshore
 The trading band was widened to ±5% from ±3% in October 2022

Onshore interbank
 FX spot, forwards and swaps
average daily spot USD1.5bn
volume:
 Cross-currency swaps (including VND)
Onshore spot
USD2m
transaction:
All transactions are done onshore, except for VND non-deliverable forwards (NDFs) and VND
Onshore Bid/ask 1-50 pips
spread:
FX options. The Association of Banks in Singapore (ABS) discontinued the original ABSIRFIX01
(1-50VND)
benchmark fixing for the VND; however, over recent years the NDF market has re-established
USD500m itself, using a new fixing source, i.e. VNDFIX=VN.
forward volume:
Onshore forward
USD2m
transaction: Spot
Onshore forward 10-70 pips Onshore spot market volume started increasing since the end of 2006, and picked up even
spread: (10-70VND) further from 2012. However, banks’ trading activities are still constrained by FX position limits
Offshore NDF monthly
USD200m regulated by the central bank. Currently, banks are allowed to keep their total VND positions
volumes:
Offshore NDF spread: 100VND
against foreign currencies at 20% of their equity. In the onshore market, USD-VND is not
Offshore NDF permitted to trade outside of the daily trading band, which is ±5% around the daily fixing rate.
USD2m
transaction size:
Forwards/FX swaps
developments. VND FX forwards and swaps liquidity has improved significantly since 2012. However, banks
Source: HSBC
are only allowed to quote to a maximum tenor of 365 days, and good liquidity is available up to
12 months. VND FX forwards and swaps are also constrained by a cap on their pricing. Non-
VND FX forwards have no tenor restrictions onshore.
Cross Currency Swaps (CCS)

Since 2015, under guidance of Circular 01/2015/TT-NHNN and its amendment (Circular
25/2021/TT-NHNN), Commercial Banks and Branches of Foreign Banks have been able to
trade and supply interest rate derivative products, including CCS for hedging purposes. The
foreign currency regulations that apply to spot and forward transactions are similarly applicable
to the initial and final principle exchanges, respectively, in CCS. Customers can sign ISDA as
their master agreement. Foreign investors who hold Vietnam Government Bonds can enter CCS
contracts to hedge for underlying (VGB) portfolios. According to the current market practice, the
tenor is up to five years and the best liquidity is within three years.
NDFs
The NDF trading resumed in part in 2018, but only since 2020 has the market reached a critical
mass to enable sufficient two-way liquidity to emerge. The majority of transactions take place
under three months but have been seen as far as 12 months. There is capacity to quote right
out to two years where liquidity is sparse. NDFs fix to VNDFIX=VN, which is an average rate of
price requests from local banks after removing 25% of the highest and lowest rates (middle
quartiles method), is published only on the Refinitiv Eikon screen.
92
January 2023
Options
A local currency FX option market does not exist at this stage in Vietnam. In 2005, the SBV used
to allow some local banks to offer onshore VND FX options on a trial basis. This trial ceased on
23 March 2009, when the SBV banned all onshore VND FX options because some banks used
this product for other (unregulated) purposes. FX options in non-VND currencies are permitted,
but banks are not allowed to purchase the options from their corporate and individual customers.
Only residents may trade options in foreign currencies.
Note: Times given are Hanoi local time = GMT + 7 hours
Source: HSBC

21-27 Jan Lunar New Year Exchange rate mechanism
29 April Hung Kings Day  The SBV is the central bank, supervising monetary policy, setting interest rates, and
1 May Independence Day managing the exchange rate. The SBV prefers slow adjustments of the VND to minimise
2 May Labour Day disruptions to businesses.
4 Sep National Day
Source: Refinitiv, HSBC
 Decree 70/2014/ND-CP, dated 17 July 2014, replacing Decree 160/2006/ND-CP and
coming into effect from 5 September 2014, is the main regulatory guideline governing
Vietnam Chamber of Commerce
foreign exchange transactions in Vietnam.
www.vcci.com.vn
 Circular No.02/2021/TT-NHNN, dated 31 March 2021, replacing Circular No.15/2015/TT-
State Bank of Vietnam
www.sbv.gov.vn NHNN and coming into effect from 17 May 2021, provides guidance in details for foreign
Refinitiv SBV Fixing exchange transactions performed by credit institutions in the local foreign exchange market.
VND=SBVN
 In accordance with the Foreign Exchange Ordinance, effective from 1 June 2006, all
current account transactions may be freely conducted in line with prevailing regulations.
Resident individuals and organisations are permitted to invest offshore, subject to the
approval of the relevant authorities.
 Circular 25/2021/TT-NHNN dated January 06, 2015, amending Circular No.

01/2015/TT-NHNN interest rate derivative products of commercial banks and foreign
bank branches
 The SBV announces a daily USD-VND central exchange rate. There is a daily trading band
of ±5% around this daily central rate for spot transactions. The central rate is based on:
 The previous day’s weighted average rate of interbank transactions for USD-VND
 The movement of eight other major currencies that have significant and important trade
activities and investment in Vietnam; these include the USD, RMB, EUR, JPY, TWD,
KRW, THB, and SGD
 Macroeconomic and monetary balances to be in line with the targets of monetary policies
 The forward rate ceiling is set by the spot rate ceiling plus the interest rate differential
between the US Fed Funds target rate and the VND refinancing rate of the forward tenor.
 The SBV may choose to announce a USD buying rate and/or a USD selling rate on a daily
basis. Both rates will remain within the daily trading band and indicate the SBV’s intention to
intervene in the FX market by buying or selling USD-VND at those specified rates through spot
and/or forward (with tenors generally up to three months) transactions at the SBV’s discretion.
93
January 2023
However, the USD buying and selling rates do not necessarily serve as the floor or ceiling,
respectively, of USD-VND spot rate, particularly amid volatile market conditions. The SBV
stopped announcing its USD buying rate between 7 September 2022 and 13 December 2022
when USD-VND spot rate was rapidly rising but has been announcing it since.
Background
 After the unification of the official and market exchange rates in March 1989, the SBV
maintained a ‘managed float’ scheme but sharply depreciated the VND in 1991 as a result
of inflationary expectations.
 The currency was subject to large, one-off devaluations annually up to late 1999, when a
‘creeping depreciation’ policy for foreign exchange was put in place to coincide with a
narrowing of the trading band over the official SBV rate.
 From 1999 until late 2006, the VND traced a low volatility path of gradual depreciation at around
a 1% pace. Since 2008, the VND has been subject to occasional one-off depreciations.
 The last time that the SBV made a large, one-off adjustment to the USD-VND reference
rate occurred on 19 August 2015 when it was moved 1% higher to 21,890 from a prior
midpoint of 21,673.
 This spot trading band has changed on a number of occasions in recent years. It was
gradually widened from ±0.5% at the end of 2006 to ±5 % in 2009. The band has since
been narrowed, first to ±3% and then to ±1% in February 2011, and then widened to ±3% in
August 2015 and ±5% in October 2022, where it is at present.
Repatriation
 Foreign investors are entitled to repatriate their investment funds and profits after all tax
obligations have been fulfilled and supporting documentation is in place.
 Foreign investors are required to buy VND or use legitimate VND funds to buy securities on
stock exchanges and/or the OTC market. They are also able to sell VND to repatriate sale
proceeds and income after all tax obligations have been fulfilled. Investors are subject to
the amended tax regulations issued by the Ministry of Finance.
 Foreign investors are mostly only allowed to trade spot transactions, except that foreign
investors, who invest in local VND government bonds, are allowed to use FX forwards and CCS
to hedge their FX risks. With FX forwards, the key requirement is to block the VND government
bond from trading with the Vietnam Securities Depository during the hedging time.
 Foreign investors are required to obtain the securities trading code issued by the Vietnam
Securities Depository and open an indirect investment cash account (FIIA) in VND to invest
in the securities market in Vietnam, including listed securities on stock exchanges and
unlisted securities in the OTC market.
 All inward and outward securities transactions by foreign investors must be conducted via FIIA.
94
January 2023
Regulations
Spot
 The VND is a restricted, non-deliverable currency. Only the SBV, state-owned banks, joint-stock
banks, joint venture banks, branches of foreign banks, and foreign bank subsidiaries may
participate directly in the foreign exchange market.
 To purchase foreign currency against either VND or another foreign currency, supporting
documents stating the legal purpose, amount, currency, and payment date are required.19
 All payments made in Vietnam must be in VND, except for a limited number of transactions
allowed by the SBV.
 For foreign investors, there are no restrictions to buy VND for investments in Vietnam.
 The foreign exchange regulations strictly control the use of foreign currency in normal
cash transactions.
 Resident organisations must seek the SBV’s approval before opening overseas foreign-
currency accounts.20
 Foreign-invested enterprises are required to open a ‘direct investment capital account’ at a
bank. This account is to be used exclusively for the receipt of equity contributed, the receipt of
short-, medium- and long-term loan proceeds from offshore creditors, and the receipt of funds
that will be used to repay medium- and long-term offshore loans or repatriate dividends.21
 From May 2003, resident companies with overseas incomes were no longer required to
immediately convert a portion of their foreign currency income into VND.
 Currently, the ceiling USD deposit rate is 0.0% for both corporate and individual customers.

 The forwards market is accessible to residents with an underlying need.
 Non-residents being foreign investors, who invest in local VND government bonds, are also
allowed to transact FX forwards and CCS22 (other offshore investors are only allowed to
trade FX spot).
 The SBV restricts the tenors of FCY-VND FX forward contracts to a minimum of three days
and a maximum of 365 days, while the maximum tenor of a FCY-VND FX swap contract is
365 days. The tenor of FX forward and swap transactions for non-VND currencies will be
decided by banks and their customers.23
 The SBV sets the ceiling rates for USD-VND foreign exchange forward tenors. The
maximum rate is set by the SBV using interest rate differentials based on the US Federal
Funds Target rate (lower rate) and the SBV’s refinancing rate. The forward points are then
added to the USD-VND spot ceiling rate to obtain the forward ceiling rate.24
19 Article 16, Circular 02/2021/TT-NHNN, dated 31 March 2021.
20 Circular 20/2015/TT-NHNN, dated 28 October 2015.
21 Circular 06/2019/TT-NHNN, dated 26 June 2019.
22 Article 1.2, the Amendment Ordinance on Foreign Exchange, dated 18 March 2013, for the definition of resident and
non-resident.
Article 4,5 and Article 16.4, Circular 02/2021/TT-NHNN, dated 31 March 2021
Article 1, Circular 25/2021/TT-NHNN, dated 31 December 2021 amending Circular 01/2015/TT-NHNN.
23 Article 6 and Article 16.2; 16.3, Circular 02/2021/TT-NHNN, dated 31 March 2021.
24 Article 5, Circular 02/2021/TT-NHNN, dated 31 March 2021
95
January 2023
 The central bank, commercial banks, branches of foreign banks, and corporates legally
operating in Vietnam considered as residents are allowed to deal FX spot, forwards, FX swaps
and non-VND options. Resident individuals are also allowed to deal in FX spot and forwards.25
 VND FX options are not permitted, though options in other currencies are still tradable.
 Banks have to obtain a license from the central bank to offer interest rate swaps, cross-
currency swaps, and structured deposits and investment products.26
 Non-resident offshore companies are allowed to open VND and foreign currency
accounts.27
25 Article 4, Circular 02/2021/TT-NHNN, dated 31 March 2021
26 Article 4.2, Circular 01/2015/TT-NHNN, dated 6 January 2015
27 Circular 16/2014/TT-NHNN, dated 1 August 2014
96
January 2023
Europe, Middle East and

Africa
97
January 2023
Algerian dinar (DZD)
 The Algerian dinar (DZD) is Algeria’s official currency; the de jure

exchange rate is a managed float, while the de facto exchange rate
is categorised as “other managed arrangement”
 The DZD is convertible and deliverable for balance of payment
current account operations, while exchange controls apply
 There is no DZD clearing on Friday and Saturday

Onshore average daily 
USD250m Spot FX trades both sides for onshore entities and mainly LHS between offshore entities
spot volume:
Onshore spot  NDFs quoted offshore out to one year with thin liquidity
USD5m
transaction:
 Onshore deliverable forward market (albeit small in size)
Onshore bid/ask 4200 pips
spread: (0.4200DZD)
Spot
Offshore average daily
USD10m The market for the DZD is sufficiently liquid to meet the demand for commercially driven
volume:
Note: Spreads are subject to change with market transactions, which form the majority of trades in the currency. The Bank of Algeria is the main
developments.
Source: HSBC
onshore market maker. There is no DZD clearing on Friday or Saturday.
Forward
Deliverable forwards are quoted out to one year, tenor being capped by regulations. Only
specific kinds of commercial activities are eligible for hedging (imports to support local
production and export of goods).
FX framework
 The Bank of Algeria is the main market maker, maintaining market liquidity and endeavours
to ensure monetary stability.
 The de jure exchange rate is a managed float, while the de facto exchange rate is
categorised as “other managed arrangement”. The Bank of Algeria has maintained a soft
USD-dominated peg since 1996.
 Exchange controls apply. Onshore transactions are subject to documentation. All
transactions data are reported to the Bank of Algeria.
 All export proceeds are required to be repatriated within a maximum of 360 days of the
delivery date. Proceeds from the export of hydrocarbons must be fully surrendered to the
Bank of Algeria. Exporters have to use their foreign currency balances to pay imports in
priority.
 Capital injections must be surrendered to the Bank of Algeria and evidence is required for
future dividend transfers.
98
January 2023

Note: Times given are Algiers local time = GMT + 1 hours. Source: HSBC.
 There is no DZD clearing on Friday and Saturday.

12 Jan Amazigh New Year
22 Apr Eid al-Fitr
1 May Labour Day
29 Jun Eid al-Adha
5 Jul Independence Day
19 Jul Islamic New Year
28 Jul Ashoora
27 Sep Prophet’s Birthday
1 Nov Revolution Day
Notes: Some holidays depend on lunar sightings
and may differ slightly from the dates given. Certain
holidays may last for more than one day. Weekend
is Friday and Saturday.
Source: Refinitiv
Bank of Algeria
www.bank-of-algeria.dz
Ministry of Finance
www.mf.gov.dz
Office for National Statistics
www.ons.dz
99
January 2023
Armenian Dram (AMD)
 The Central Bank of Armenia (CBA) operates a freely floating

exchange rate regime
 The CBA retains the ability to intervene in the FX market to curb
AMD volatility by either adding to or selling FX reserves
 Residents and non-residents can make foreign exchange purchase
and sale transactions in the domestic currency market without any
restrictions through parties licensed by the CBA

Average daily  FX Spot
USD85m
spot volume:
Spot transaction: USD5m  FX forwards (deliverable)
40k-60k pips (4-
Bid/ask spread:
6 AMD) Spot
Average daily
n/a The AMD spot FX market mainly trades at the T+0 convention with daily turnover around
forward volume:
Forward transaction: USD10m USD85m and no centralised FX marketplace is available, i.e. 100% OTC. USD-AMD is the main
Forward spread 50k-200k pips pair with c65% of the total market volume. At the same time, there are no restrictions on other
(up to 12-month): (5-20 AMD) currencies trading.
Note: Spreads are subject to
change with market
The market is fairly liquid during the day to meet the demand for commercially driven
developments. transactions with a normal bid/offer spread of 4-6 AMD.
Source: HSBC
The CBA publishes AMD market-based average exchange rates versus selected foreign
currencies on a daily basis at 1600 local time.
Forwards
There is no primary FX forward market available and no large financial institution locally is
making a market for AMD forwards and transactions are considered on a deal-by-deal basis.
Forwards are predominantly traded on a deliverable basis. Corporates tend to trade deliverable
forwards in cases where they have underlying cash flows.
Cross-currency forwards, i.e. versus non-AMD, are freely tradeable within the currency pairs
quoted by banks.
100
January 2023
Note: Times given are Yerevan local time = GMT + 4 hour
Source: HSBC

FX framework
New Year Holidays The primary objectives of the Central Bank of Armenia (CBA) are price stability and financial
1-2 Jan
6 Jan Christmas Day
stability and it is responsible both for carrying out monetary policy and financial system
28 Jan Army Day supervision. In 2006, the CBA adopted an inflation-targeting regime and since 2007 the target
8 Mar Women’s Day level is 4% with an acceptable deviation range of plus/minus 1.5%. Monetary policy is mainly
Genocide Victims conducted via weekly repo operations, while standing lending (collateralised) and deposit
24 Apr
Remembrance Day facilities with an overnight tenor are also available. The CBA also implements FCY/LCY FX
1 May Labour Day
swaps on an ad hoc basis, while the volumes have been modest so far.
9 May Victory and Peace Day
28 May Republic Day When deemed necessary the CBA also changes the required reserves maintenance ratio and
5 Jul Constitution Day the currency structure for maintenance (for example, it changes the fraction of reserves against
21 Sep Independence Day
foreign currency liabilities, which should be held in local currency). Foreign exchange
31 Dec New Year Holiday
interventions (done versus USD) are also conducted in both directions to smooth volatility or
Source: HSBC
absorb excess liquidity available in the market.
Central Bank of Armenia There is a high dollarization of the financial sector:
http://www.cba.am/
Ministry of Finance  The share of residents’ foreign currency deposits of residents’ total deposits is 43.6%
http://www.minfin.am/
Armenia Securities Exchange  The share of foreign currency loans to residents of total loans to residents is 37.5%
http://www.amx.am/
The change in the value of the AMD is one of the major contributors to inflation, given the high
share of imported goods. This explains why the currency has a central role for both the financial
and real sectors of the economy.

 There are no restrictions on the purchase/sale of foreign currency executed with regulated
financial institutions (banks, exchange points, etc.).
 Quotations for the sale of goods (inventory), rendering services and labour remuneration
are to be made in the Armenian currency.
 Payments for the sale of goods (inventory), rendering services, property use, as well as
labour remuneration between residents are accepted and made in the Armenian currency.
 There are no restrictions on capital flows, while the CBA has the right to introduce certain
controls to prevent instability of the financial system, circulation of criminal proceeds and
terrorism financing, statistical and economic risks.
 Investments in statutory and share capital of legal entities can be done in the AMD.
101
January 2023
Bahraini dinar (BHD)
 The Central Bank of Bahrain (CBB) pegs the BHD to the USD
 The BHD is fully convertible and deliverable
 There is no clearing on Friday and Saturday

USD200m FX spot
volume:
Spot transaction: USD10m  FX forwards quoted out to three years with tenors out to five years available on request
5 pips
Spot spread: Spot
(0.00005BHD)
Average daily forward
The BHD is fully convertible in the spot market and there is no spread between
USD100m
volume: onshore/offshore markets.
1M: 10 pips
(0.00010BHD) The market for the BHD is sufficiently liquid to meet the demand for commercially driven
Forward transaction:
12M: 50 pips transactions, which form the majority of trades in the currency. The market became less liquid in
(0.00050BHD) mid-2018 as Bahrain negotiated a financial support package with its regional allies. Market
developments.
conditions have normalised since.
Source: HSBC
Forwards
Forwards are quoted out to three years with tenors out to five years available on request. There
is a spread between onshore and offshore markets.
22-24 Apr Eid al-Fitr
1 May Labour Day
FX framework
28 Jun- Eid al-Adha
1 Jul  The Central Bank of Bahrain (CBB) is responsible for maintaining the value of the BHD and
19 Jul Islamic New Year endeavours to ensure monetary stability.
28-29 Jul Ashura
27 Sep The Prophet’s Birthday  The BHD has been pegged to the USD since 1980 at BHD0.37600:USD1. The CBB buys
16-17 Dec National Day and sells USD at rates close to the official exchange rate. The CBB provides this facility to
Notes: Some holidays depend on lunar sightings commercial banks located in the Kingdom of Bahrain.
holidays may last for more than one day. Weekend 
There is no clearing on Friday and Saturday.
Central Bank of Bahrain
www.cbb.gov.bh
Ministry of Finance  The BHD is fully convertible with no restrictions on foreign exchange.
www.mof.gov.bh

Note: Times given are Manama local time = GMT + 3 hours
Source: HSBC
102
January 2023
Czech koruna (CZK)
 The CZK is freely floating and fully convertible

 The Czech National Bank (CNB) may intervene in the FX market to
fulfil its inflation mandate
 The Czech Republic is a member of the European Union

Average daily EUR1bn  Spot FX
spot volume:
Spot transaction: EUR10m  FX forwards out to 10 years
5-10 pips
Bid/ask spread:  FX options out to five years
(0.005-0.010CZK)
Average daily
EUR6bn Spot
forward & swap
volume: Daily spot turnover is estimated at close to EUR1bn, and there is good liquidity during the day in
Forward
EUR50m EUR-CZK. The CZK is mainly traded against the EUR and the USD. Trading the CZK against a
transaction:
Forward spread 5 pips range of crosses, including against the GBP, CHF and PLN, is also possible.
(3-month): (0.005CZK)
Forwards/FX swaps
Forward spread 20-25 pips
(12-month): (0.020-0.025CZK) Daily swaps and forwards turnover is estimated at about EUR6bn with the best liquidity in tenors of
Average daily one year or less. Swap prices may be quoted up to 10 years, including caps, floors and swaptions.
EUR250m
option volume: The fixing rate is either the 3m or 6m Prague Interbank Offered Rate (PRIBOR). CZK forwards can
Option transaction: EUR20m
be priced as far out as 10 years. Forward rate agreements out to two years are also available.
Implied option
volatility spread 0.6 vol Options
(3-month):
Note: Spreads are subject to change with market The options market is generally liquid with the best liquidity in EUR-CZK options of one year or
developments.
Source: HSBC
less. Liquidity in USD-CZK options is lower. Options expire at 1000 New York local time. Both
vanilla and exotic options are offered. The maximum tenor offered is three years and the
average daily turnover is around EUR250m.
FX framework
The Czech National Bank (CNB) is responsible for maintaining price stability and bank supervision.
The CNB is an independent body whose governor is appointed by the country’s president for a
six-year term.
On 7 November 2013, the CNB started using the exchange rate as an additional monetary
policy instrument. The CNB intervened in the FX market to keep EUR-CZK close to 27.0. This
exchange rate commitment was asymmetric, i.e. the CNB stopped EUR-CZK falling below 27.0
(stopping CZK appreciation) but let movements above this level be market-determined. The
CNB removed the EUR-CZK floor on 6 April 2017.
103
January 2023
Note: Times given are Prague local time = GMT + 1 hour
Source: HSBC
The exchange rate was once again used as a monetary policy instrument in 2022. As in 2013-2017,
the CNB’s exchange rate commitment was one-sided, although on the other side to the past, i.e.
it has intervened only to prevent CZK depreciation. The CNB has not specified the levels, which it will
7 Apr Good Friday act upon.
In the event of a monetary emergency, the power to implement a rapid response is turned over
1 May Labour Day
to the cabinet.
8 May Liberation Day
5 Jul St Cyril and St Methodius The government has enacted several pieces of legislation geared towards encouraging foreign
Day
investment in the country. Incentives are offered to firms on a case-by-case basis.
6 Jul Jan Hus Day
28 Sep Statehood Day
28 Oct Independence Day
17 Nov Freedom and Democracy
Day
24 Dec Christmas Eve  The currency is fully convertible and there are no restrictions on remitting capital abroad,
25 Dec Christmas once all applicable taxes have been paid.
26 Dec St Stephen’s Day
 There are no restrictions on firms borrowing locally or internationally.
Source: HSBC
Additional Information  Firms are not required to exchange foreign currency earned on exports.
Czech National Bank
www.cnb.cz
Ministry of Finance
www.mfcr.cz
104
January 2023
Egyptian pound (EGP)
 Liberalisation of EGP has been a key focus of successive IMF

programmes since 2016
 The market has been illiquid since early 2022, but reforms introduced
at the start of 2023 centre on a “durably flexible” FX regime
 The authorities are seeking to expand the onshore forward market but
for now trading is limited; there is a more liquid offshore NDF market

Onshore average
USD250m  FX spot
daily spot volume:
Onshore spot  NDFs up to two years
USD1m
transaction:
Onshore Bid/ask 1000 pips FX Spot
spread: (0.1EGP) Under normal market circumstances, the EGP is fully convertible in the spot market for all
Offshore average commercial transactions.
USD75m
daily NDF volume:
Offshore NDF Forwards/FX swaps
USD5m
transaction: EGP forwards are traded offshore, usually in the form of USD-settled non-deliverable forwards
1M: 4000 pips (NDFs).
Offshore NDF (0.4000EGP)
spread: 12M: 5000 pips Onshore LHS forward trades for corporate clients are allowed by the CBE on a case-by-case basis.
(0.5000EGP)
Note: Spreads are subject to change with market Towards the end of 2022, the central bank announced it will allow onshore trading of FX swaps,
developments.
Source: HSBC forwards and onshore EGP-settled NDFs in an effort to develop the onshore FX market.
Options
There is currently no established options market for the EGP.
FX framework
Liberalisation of the FX regime was a key focus of the IMF-anchored reforms pursued since
2016, but market volatility remained low. In 2022, heavy capital outflows saw liquidity dry up and
the EGP pass through a series of step change devaluations that saw the currency fall by 60%
against the USD. The losses continued into the first weeks of January 2023. Egypt signed a
new IMF agreement in December 2022 that pledges a shift to a “durably flexible” FX regime, the
substance of which will likely become clear during the course of 2023.
As part of the overhaul, the CBE announced in 4Q22 that it would seek to deepen and broaden
the onshore FX market by allowing swaps and forwards trading for commercial purposes,
though this has yet to emerge. The CBE also restated its commitment to an inflation-targeting
monetary regime with a 7% (+/-2ppt) target for end-2024.
105
January 2023
Note: Times given are Cairo local time = GMT + 2 hours
Source: HSBC
2023 Holiday Calendar Repatriation and other regulations

7 Jan Coptic Christmas
25 Jan Police Day  Offshore EGP trading with local banks is permitted for underlying securities transactions,
16 Apr Coptic Easter commercial and personal transactions.
22-24 Apr Eid-al-Fitr
 Onshore LHS forward trades for corporate clients are allowed but may be subject to the
25 Apr Sinai Liberation Day
CBE’s review on a case-by-case basis.
1 May Labour Day
27 Jun Arafat Day  Offshore banks can place EGP funds in current accounts with local banks with no
28 Jun- Eid al-Adha withholding tax.
1 Jul
30 Jun June 30 Revolution
23 Jul Revolution Day
27 Sep The Prophet’s
Birthday
6 Oct Armed Forces Day
Note: Some holidays depend on lunar sightings
and may differ slightly from the dates given.
Certain holidays may last for more than one day.
Weekend is Friday and Saturday.
Ministry of Finance
www.mof.gov.eg
Central Bank of Egypt
www.cbe.org.eg
Central Agency for Public
Mobilisation and Statistics
www.capmas.gov.eg
106
January 2023
Ghana cedi (GHS)
 The Bank of Ghana (BOG) operates a floating exchange rate regime

 The BOG publishes daily reference foreign exchange rates against
the cedi and sets monetary policies through the Monetary Policy
Committee (MPC)
 There is full current account convertibility, but there is a limited local
market of deliverable FX forwards
Normal Market Conditions The FX rules are issued by the BOG under Section 17 and Section 31 of the Foreign Exchange Act
Onshore average daily 2006 (Act 723). The market offers the following products:
USD10-30m
spot volume:
 Spot FX
Onshore spot
USD0.5-2m
transaction:
 FX forwards
Onshore spot bid/ask 100 pips
spread: (0.0100GHS) Spot
Onshore average daily The interbank foreign exchange market is open from 0900 to 1600 hours GMT on all business days.
USD5-10m
forward volume:
Foreign exchange dealers may operate and must be licensed by the BOG. Licenced Foreign
1M: 100 pips
(0.0100GHS) Exchange Dealers (LFXDs) are required to update indicative quotes for buying and selling US dollars
Onshore forward
12M: 1000 at regular intervals on the Reuters and Bloomberg information systems. The list of LFXDs is available
spread:
pips
on the BOG’s website. Indicative quotes shall be updated at intervals of no more than 30 minutes.
(0.1000GHS)
1m: 200 pips
Trading platform and rule:
(0.0200 GHS)
Offshore forward
12M: 1000 
spread: All interbank FX trades must be booked on the Reuters platform and appropriately
pips
(0.1000 GHS) confirmed within five (5) minutes after the trade is concluded. These trades must also be
Note: Spreads are subject to change with market reported in the daily FX report submitted to the BOG.
developments.
Source: HSBC
 LFXDs are prohibited from participating in any form of FX auction initiated by any exporter
or foreign exchange earner in Ghana.
 The BOG buys and sells foreign exchange at the interbank market average rates based on
its annual cash flow projection.
Forward
 Currently, there is only a limited local market in derivatives. Only Authorised Dealers (ADs)
may engage in forward foreign exchange transactions. The BOG publishes an auction
calendar for foreign exchange forwards on quarterly basis. The calendar will be published
one week preceding the quarter on the BOG’s website and on the BOG’s page on Reuters
Terminal to enable market participants to adequately plan. The announcement shall list the
date and time, auction volume target, settlement and other relevant information.
 The auctions shall be limited to the purchase or sale of the USD against equivalent value in
the national currency – GHS – on a forward basis at various tenors, including, but not
limited, to 7-day, 15-day, 30-day, 45-day, 60-day and 75-day tenors.
107
January 2023

Note: Times given are Accra local time = GMT
Source: HSBC
2023 Holiday Calendar  The minimum bid size is USD500,000, in multiples of USD250,000 and is expressed in
2 Jan New Year’s Day numbers. The maximum bid size of a single bid shall not exceed ten percent (10%) of the
9 Jan Constitution Day
announced auction target.
6 Mar Independence Day
7 Apr Good Friday  The cumulative volume of all bids from any single bank shall not exceed twenty percent
10 Apr Easter Monday (20%) of the announced target for the auction. FX Auction results will be published on the
24 Apr Eid Al-fitr Reuters dealing system by 1400 local time on the day of the auction.
1 May May Day
 An offshore NDF market is present.
25 May Africa Unity Day
29 Jun Eid Al-adha
4 Aug Founder’s Day
21 Sep Memorial Day FX framework
1 Dec Farmers' Day
25 Dec Christmas Day The GHS operates under a floating regime. The exchange rate is determined in the market by both
26 Dec Boxing Day
interbank foreign exchange activity and foreign exchange bureaus. The BOG curbs excess volatility
in the currency but does not publish information on its interventions.
is Friday and Saturday. The BOG publishes daily reference foreign exchange rates against the cedi. The USD-GHS
reference mid-rate is the weighted average of all daily spot foreign exchange market transactions of
Additional Information at least USD10,000 reported by all banks until 1400 local time to the BOG. All BOG-bank, bank-
Bank of Ghana
www.bog.gov.gh bank, and larger size (above USD10,000) bank-customer deals concluded and reported are
Ministry of Finance included. The other currencies’ reference rate to the GHS is based on the current cross rate in the
www.mofep.gov.gh international foreign exchange market from Reuters. The previous day’s reference rate as computed
is used for all transactions involving the BOG.
The Monetary Board of the BOG is responsible for making all policy decisions related to the
management, operation and administration of the BOG, including monetary and FX policy.
Background
 In 1965, Ghana decided to leave the GBP as the official currency and introduced the GHS.
First, it was pegged to the GBP and then later to the USD.
 In the early 1970s, there were many devaluations of the GHS and by 1973 the GHS was
finally pegged at a rate of 2.8 GHS to USD1.00 due to inflation.
 In 1990, the government fully liberalised the exchange rate and the GHS has been freely
floating since then.
 On 1 July 2007, the currency was redenominated with 1 new cedi (GHS) worth 10,000 cedi
(GHC).
Repatriation
 Settlements related to transactions covered by bilateral payment agreements are made
through government nostro accounts maintained at the BOG and other countries’ central
banks and commercial banks. All convertible currencies are accepted for all transactions.
108
January 2023
 Local currency may not be used in international current and capital transactions. All
transactions in Ghana must be conducted in GHS, which is the sole legal tender.
 Cash withdrawals OTC from foreign exchange accounts (FEAs) and foreign currency
accounts (FCAs) are permitted only for travel outside Ghana and cannot exceed
USD10,000.
 FEAs and FCAs can continue to be opened and operated. Balances in these accounts can
continue to be held in foreign currency and cannot be converted to GHS.
 External transfers from FEAs and FCAs and electronic card payments by importers up to
USD50,000 are permitted without initial documentation.
 For non-residents, FEAs are allowed, if the balances in these accounts are held in foreign
currency and will not be converted to GHS.
 Non-residents may have GHS accounts, which are freely convertible to foreign currency
and may make transfers abroad with relevant supporting documents.
Regulations
 The BOG’s approval is required to hold an account abroad.
 Letters of credit are available.

 The maximum tariff rate is 20% of the c.i.f. value of imports, in addition to a VAT of 12.5%,
a national health insurance levy (NHIL) of 2.5%, a Ghana education trust fund levy (GETFL)
of 2.5% and a COVID-19 health recovery levy (CHRL) of 1%. Importers without a taxpayer
identification number are subject to a 5% withholding tax on the value of their imports.
 Exporters are required to sell foreign exchange receipts from the export of minerals and
cocoa directly to commercial banks.
 Residents and non-residents traveling abroad may carry up to the equivalent of USD10,000
in cash or traveller’s checks or any other instrument.
 Non-resident travellers may re-export foreign currency in excess of USD10,000, provided
the amount was declared on entry.
 Foreign shareholders/promoters of a new bank in Ghana are required to bring funds of not
less than 60% in convertible currency of the initial paid-up capital into the country.
 There is only a limited local market in derivatives.
 Foreign currency-denominated loans granted by local banks to their customers are subject
to their own internal procedures and processes and in compliance with the risk
management guidelines of the BOG.
 The BOG’s approval is required for an equity stake of more than 5% in the banking sector
by non-residents. For foreign-owned banks, 60% of the capital must consist of convertible
currencies brought into Ghana.
 The BOG records and confirms foreign capital inflows and administers foreign exchange for
official payments and travel.
 FX transactions by the private sector are approved by authorised dealers without reference
to the BOG.
 There is no control on trade in gold, including coins and bullion.
109
January 2023
Hungarian forint (HUF)
 The HUF has been a free-floating currency since 2008

 The HUF is fully convertible and most commonly traded against
the EUR
 Hungary is a member of the European Union

EUR1bn Spot FX
volume:
Spot transaction: EUR10m  FX forwards out to five years
15 pips
Bid/ask spread: 
(0.15HUF) FX options
Average daily
forward & swap EUR 1-2bn Spot
volume: There is generally good liquidity in the spot market with an estimated average daily spot
Forward transaction: EUR30-50m
turnover of around EUR1bn.
Forward spread 10 pips
(3-month): (0.1 HUF) Forwards/FX swaps
Forward spread 50 pips Since 2001 the HUF has traded on a deliverable basis, having previously traded offshore via
(12-month): (0.5 HUF)
non-deliverable forwards (NDFs). The FX forwards are commonly quoted against both the EUR
Average daily option
EUR250m and the USD with tenors available out to five years. Tenors of one year or less provide the best
volume:
Option transaction: EUR20m liquidity. Exchange-traded futures are available in Budapest.
Implied option
volatility spread 1.0 vol Options
(3-month): The best liquidity is in options of one year or less but can be traded out to three years. Vanilla
Note: Spreads are subject to change with market and exotic options are available, mostly against the EUR. The standard ticket size is around
developments.
Source: HSBC EUR20m and the average daily turnover is estimated at around EUR250m.
FX framework

Hungary removed its currency trading bands on 25 February 2008 and now maintains a free-
floating currency. Prior to this, the HUF was managed against various baskets and, from 2000,
solely against the EUR within a trading band.
The HUF is fully convertible, most commonly traded against the EUR and the USD.
Monetary policy is established by the Magyar Nemzeti Bank (MNB, the central bank) and, within
this, the Monetary Council is responsible for implementing policy. The MNB implemented an
inflation-targeting system in June 2001 in line with its primary objective of achieving and
maintaining price stability. The MNB set, with effect from 2007, an average 3% increase (+/- 1%)
in consumer prices as its medium-term inflation target, consistent with price stability.
In 2016, the MNB started conducting FX swap operations to provide HUF liquidity on a
discretionary basis. In November 2021, the MNB announced the end of this instrument to
reduce liquidity in the banking system.
110
January 2023
Note: Times given are Budapest local time = GMT + 1 hour
Source: HSBC
In September 2020, the MNB introduced a FX swap instrument to provide foreign currency
liquidity to the banking sector. From July 2022, the MNB has switched from overnight to T/N
15 Mar Revolution Day
maturity on its EUR liquidity-providing FX swap auctions, which are held daily.
7 Apr Good Friday Since October 2022 the 1-day deposit rate, where banks can place HUF at the central bank at a
10 Apr Easter Monday different interest rate than the base rate, has become an important instrument for monetary
1 May Labour Day
policy and an important factor in the FX market. The 1-week deposit facility, which lasted from
29 May Whit Monday
2020 to 2022, has been retired with the introduction of the 1-day deposit rate. The MNB
20 Aug St Stephen’s Day
indicated that the 1-day deposit operations were temporary, designed for exceptional
23 Oct Republic Day
1 Nov All Saints’ Day circumstances. The MNB intends to revert to its traditional framework whereby the main policy
25 Dec Christmas instrument is the base rate.
26 Dec Christmas (2nd Day)
Source: HSBC
National Bank of Hungary
https://www.mnb.hu/en The MNB and the Ministry of Finance removed all restrictions on foreign exchange transactions
Hungarian Government for both residents and non-residents in 2001.
http://www.kormany.hu/en
All entities capable of establishment under Hungarian law may freely use HUF and foreign
currencies (FCY) in their legal transactions or activities. In other words, local firms may hold
HUF in overseas accounts and FCY in local accounts.
There are no restrictions on remitting profits, capital or dividends, or international borrowing.
111
January 2023
Israeli shekel (ILS)
 The Bank of Israel (BoI) oversees a floating currency but maintains the
option to intervene in the FX market
 The BoI no longer runs a systematic FX purchase programme but can
engage in sizeable discretionary USD purchases
 FX transactions are relatively unrestricted, but registration and
reporting of transactions can be required

Average daily spot USD3bn
 Spot FX
volume:
Spot transaction: USD10-50m  FX forwards and cross-currency swaps out to 10 years
Bid/ask spread: 10 pips
(0.0010ILS)  FX options out to five years, including both vanilla and complex products
Average daily
forward and swap USD4-5bn  Bonds, T-bills and ILS-based interest rate derivatives out to 30 years
volume:
Forward transaction: USD25-100m Spot FX
Forward spread: 3-5 pips
The spot market is fairly liquid. Liquidity decreases on Fridays when banks in the country close
(0.0003-0.0005ILS)
Average daily option USD250-500m early for the Sabbath.
volume:
Option transaction: USD20-40m Forwards/FX swaps
Implied option Deliverable FX forwards are available out to five years. The liquidity is also good in FX swaps.
volatility spread 0.8 vol
(3-month): A fairly liquid interest rate swaps market exists and interest rate swaps generally pay a fixed
developments.
rate against the floating 3m Tel Aviv Interbank Offered Rate (TELBOR). However, the BoI is
Source: HSBC seeking to transform the Telbor into a new overnight benchmark (SHIR).
Options
Options out to three years are available. Liquidity is good with an estimated daily volume of
USD250-500m. The average size of a typical transaction is USD20-40m.
Bonds, T-bills and IR derivatives

A full range of interest rate products is available, including Israeli government bonds, central bank
T-bills, interest rate swaps (IRS), and forward rate agreements (FRAs). However, foreign investors
pay a withholding tax on transactions in short-term debt instruments (BoI T-bills and
Government IL-T-Bills) issued at inception with less than 13 months to maturity.
FX framework
There are currently no exchange controls in Israel.

The BoI is responsible for monetary policy and currency management. In 2005, the BoI ended
the use of an exchange rate band and freely floated the ILS. This shift in the currency regime
rescinded the BoI’s authority to intervene in the market. In March 2008, however, the BoI
112
January 2023
Notes: Times are Tel Aviv local time = GMT + 2 hours
Source: HSBC
announced a daily FX purchase scheme to boost reserves by up to USD10bn to USD35-40bn in

total. This target was later revised and finally removed in August 2009 when the BoI moved to a
2023 Holiday Calendar sporadic method of intervention when fluctuations in the exchange rate ‘do not match the
12 Apr Passover (ends) fundamental underlying economic forces’.
26 Apr Independence Day
In May 2013, a fixed intervention scheme was announced aimed at neutralising the impact of
26 May Shavuot
natural gas exports on the current account, totalling USD2.1bn through 2013 and USD3.5bn in
16-17 Sep Rosh Hashanah
2014. This scheme continued in 2015, 2016, 2017 and 2018, but intervention was reduced to
25 Sep Yom Kippur
USD3.1bn, USD1.8bn and USD1.5bn, respectively. In November 2018, the central bank
30 Sep Sukkot
7 Oct Simchat Torah announced the end of the FX purchases programme. However, the BoI stated that it will
Source: HSBC
continue to intervene in the FX market in cases of excessive fluctuations. On a discretionary
basis, it bought nearly USD4bn in 2019 and USD21bn in 2020. In January 2021, the central
bank unexpectedly announced a programme of USD30bn but emphasised that it was an
Bank of Israel
www.boi.org.il exceptional programme for exceptional circumstances. Therefore, this programme ceased at the
Ministry of Finance end of 2021 and the BoI was hands off in 2022.
www.mof.gov.il
Ministry of Industry: Trade and It is worth emphasising that the BoI can also offer USD liquidity at times of financial stress. For
Labour instance, the central bank offered FX swaps to provide USD to local banks at the height of
www.moital.gov.il
financial stress in 2020.
Tel Aviv Stock Exchange
www.tase.co.il On 30 October 2014, the BoI removed the 10% reserve requirement on FX derivative transactions
by non-residents with local banks; however, the reporting requirement for non-residents to fill out a
20-page form reporting FX activity above USD10m remained intact. Additional reporting
requirements were introduced effective 1 January 2017.
Complementary to the above, a withholding tax is in place on profit/coupon incurred from local
short-term debt investments issued for less than 13 months. The tax rate may vary based on
relevant tax treaties related to the investor’s country of residency.

 There are no restrictions on Israeli citizens investing abroad.
 There are no restrictions on local residents or firms borrowing internationally; however, a
withholding tax (WHT) might be applicable.
 There are no restrictions on holding foreign currency in onshore accounts or on holding the
ILS in offshore accounts.
 Cross-border payments, which are not marked to market, may attract a WHT and require
attention.
 Effective 1 January 2017, a mandatory reporting requirement was introduced by the BoI for
all investors (local and offshore), covering over-the-counter (OTC) derivatives on FX and
rates. This is an extension of the requirement introduced in July 2011.
113
January 2023
Jordanian dinar (JOD)
 The Central Bank of Jordan (CBJ) pegs the JOD against a basket of
currencies; however, in reality, it appears to operate a USD peg
 The JOD is convertible and deliverable

Average daily
USD50m  FX Spot
spot volume:
Spot transaction: USD5m  FX forwards out to six months with tenors out to three years available on request
10 pips
Spot spread: Spot
(0.001JOD)
Average daily The JOD is fully convertible in the spot market. Although onshore banks cannot lend JOD to
USD20m
forward volume: offshore banks, the latter can lend JOD deposits to onshore banks without paying a withholding
Forward tax. The JOD is relatively illiquid and transactions tend to be commercially backed.
USD5m
transaction:
20 pips Forwards
Forward spread:
(0.002JOD) The JOD FX forwards market is thin, illiquid and infrequently traded. However, forwards can be
Note: Spreads are subject to change with market quoted out to one year with an average ticket size of USD5m.
developments.
Source: HSBC
Swaps
2023 Holiday Calendar Onshore banks can trade FX swaps on both sides within Jordan and with offshore banks.
22-24 Apr Eid Al-Fitr
1 May Labour Day FX framework
25 May Independence Day
27 Jun Arafat Day The CBJ was established in 1959. It was given the responsibility of maintaining monetary stability,
28 Jun-1 Jul Eid al-Adha ensuring the convertibility of the JOD, and promoting sustained economic growth. The JOD has been
18 Jul Islamic New Year officially pegged to a basket of currencies since May 1989, although since 1996 it has been stable at
27 Sep The Prophet’s JOD0.7090:USD1. Onshore banks can sell and buy USD from the CBJ at the official rates of
Birthday
25 Dec Christmas Day JOD0.7080 and JOD0.7100, respectively. There is no clearing on Friday and Saturday.
Note: Some holidays depend on lunar sightings and
may differ slightly from the dates given. Certain
is Friday and Saturday. Repatriation and other regulations
Additional Information  The JOD is a fully deliverable currency and there are no regulations on repatriation.
Central Bank of Jordan
www.cbj.gov.jo
Ministry of Finance
www.mof.gov.jo
Notes: Time is based on Amman local time = GMT + 2 hours
Source: HSBC
114
January 2023
Kazakh tenge (KZT)
 The National Bank of Kazakhstan (NBK) introduced a free-floating

exchange rate in August 2015
 Yet, the current exchange rate regime can be better described as a
managed float
 The domestic FX market trades mainly in spot; most offshore trades
are done via the NDF market in relatively thin liquidity

Onshore average
USD100-150m  Spot FX
daily spot volume:
Onshore spot
USD2-5m  FX forwards (deliverable/NDFs)
transaction:
Onshore bid/ask 50-100 pips
 Term deposits
spread: (0.50-1.00KZT)
Onshore average
USD50-200m Spot
swap volume:
Onshore swap The domestic KZT FX market mainly trades spot with settlement traditionally value tomorrow
USD50-150m
transaction: (T+1). Volume is split unevenly between OTC (including non-residents) and exchange-traded
Offshore average
USD50-75m transactions with the stock exchange seeing the most liquidity.
daily forward volume:
NDF transaction: USD1-10m
50-100 pips
Forwards/FX swaps
NDF spread:
(0.50-1.00KZT) Onshore FX forwards and swaps are generally short term with liquidity up to one week, while
Note: Spreads are subject to change with market the offshore market, which trades mainly via non-deliverable forwards (NDFs), can
developments.
Source: HSBC accommodate longer tenors, though with limited liquidity.
In 2014, a regulation came into force restricting local banks’ off-balance sheet FX positions to
30% of capital, causing many smaller banks to exit the market. FX forwards market liquidity
declined as a result. Swaps out to two working days are exempt from the above restriction.
FX options
The above regulation also stopped meaningful FX options pricing.
FX framework
Exchange rate regime

On 20 August 2015, the NBK introduced a free-floating exchange rate and adopted an inflation-
targeting policy. Previously, the KZT was managed within an official currency band of USD-KZT
170-198. However, the KZT had de facto traded within a narrow range of USD-KZT 180.5-188.5
under a tight peg regime after a one-off devaluation in February 2014.
115
January 2023
Notes: Time is based on local time = GMT + 5 hours
Source: HSBC
2023 Holiday Calendar The current exchange rate regime can be better described as a managed float instead of a free
2-3 Jan New Year Holiday float. The NBK reserves the right to intervene to prevent dramatic fluctuations of the exchange
7 Jan Orthodox Christmas rate, as well as to ensure the stability of the financial system.
8 Mar Women’s Day
Institutional framework
21-23 Mar Nauryz Holiday
1 May Unity Day
There is a two-tier banking system in Kazakhstan, consisting of the NBK and 35 commercial
8 May Defender of the banks. The Development Bank of Kazakhstan and the Eurasian Development Bank have a
Fatherland Day’s special legal status and are exceptions. The NBK is accountable to the president of the
Holiday
Republic of Kazakhstan. The primary goal of the NBK is to ensure price stability in Kazakhstan.
9 May Victory Day
28 Jun Kurban Ait The NBK aims to achieve an annual inflation rate of 3-4%.
6 Jul Capital Day
30 Aug Constitution Day
1 Dec First President’s Day
16-19 Dec Independence Day’s
Holiday  There are no restrictions on KZT convertibility; however, local legal entities must state their
31 Dec New Year’s Eve aims for buying foreign currency for statistical purposes.
Source: HSBC
For more details: Currency operations | National Bank of Kazakhstan
National Bank of Kazakhstan  All local legal entities can conduct FX transactions but only via authorised local banks.
www.nationalbank.kz
Ministry of Finance  Non-residents can trade KZT offshore without restrictions.
www.minfin.kz
Kazakhstan Stock Exchange
www.kase.kz
Government of Kazakhstan
www.government.kz
Statistics Agency
www.stat.gov.kz
116
January 2023
Kenyan shilling (KES)
 The Central Bank of Kenya (CBK) introduced a free-floating

exchange rate in December 1995
 Yet, the current exchange rate regime can be better described as a
managed float as the CBK conducts FX interventions
 There are no restrictions on KES convertibility; however, local legal
entities must state their aims for buying foreign currency
Normal Market Conditions The FX rules are issued by the Central Bank of Kenya (CBK) following the guidelines mentioned in
Onshore average Part VI and Part VIA of the Central Bank of Kenya Act and Legal Notice no: 23 of 28 February 1996.
USD20-30m
daily spot volume: Foreign exchange dealers consist of authorised banks and foreign exchange bureaus licensed by
Onshore spot
transaction:
USD1-2m the CBK under Section 33B of the Act. On 27 August 2017 the Kenyan regulatory authority – the
Onshore spot Capital Market Authority (CMA) – introduced a regulatory framework for online forex trading. This
bid/ask spread: (0.20-0.30KES) added forex to the legalised and mainstream capital market operations in the country. Regulated
Onshore average
USD3-5m brokers can now freely market and provide their online trading services in Kenya and retail traders
daily forward volume
Onshore forward can now trade currencies in a regulated environment.
(0.20-0.3KES)
bid/ask spread:
Offshore average The following products are available in the market:
daily forward USD20-30m
volume:  Spot FX
developments  FX forwards
Source: Internal market estimates, HSBC
Spot
The spot market is operated by the CBK and licensed commercial banks, foreign exchange
bureaus and remittance providers to deal in foreign exchange with the public. The CBK usually
deals with authorised commercial bank dealers either through foreign exchange auctions (for
foreign exchange purchases and sales), direct purchases and sales via the Reuters Dealing
System or Bloomberg (when intervening to smooth extreme fluctuations in the trading level), or
purchases through mutual agreement with individual commercial bank dealers (when the
dealers have surplus foreign exchange). The latter is especially useful for building up foreign
exchange reserves without unduly affecting the exchange rate. The interbank market is also
available and is based on a market-making arrangement.
FX forwards
An offshore NDF market is present. Commercial banks are authorised to enter into forward
exchange contracts with their customers at market-determined exchange rates in currencies of
their choice. There are no limits on the amount or period of cover. For prudential purposes,
commercial banks require approval from the CBK before introducing new products. The CBK
does not participate in the forward foreign exchange market.
117
January 2023

Note: Times given are Nairobi local time = GMT
Source: HSBC

FX framework
7 Apr Good Friday Kenya repealed exchange control laws in 1995 and has moved to a fully market-determined
10 Apr Easter Monday exchange rate system. There are no direct controls on foreign exchange.
24 Apr Eid Al-fitr
1 May Labour Day The de jure exchange rate arrangement is free-floating. Official foreign exchange market
1 Jun Madaraka Day
interventions aim to moderate the rate of change and prevent undue fluctuations in the
29 Jun Eid Al-adha
10 Oct Huduma Day exchange rate, rather than to establish a particular level.
20 Oct Mashujaa Day
12 Dec Jamhuri Day Data on interventions are only partially disclosed. If the CBK uses the auction system to
25 Dec Christmas Day intervene, the market is informed of the amount and the average rate. The average rate is
26 Dec Boxing Day
published after the auction closes. If the CBK decides to intervene directly (i.e. by buying or
selling foreign exchange from or to banks directly through the Reuters Dealing System), the
Additional Information market is informed, but amounts and rates are not published.
The National Treasury
https://www.treasury.go.ke/
The CBK publishes only a daily indicative foreign exchange rate, which is usually the previous
Nairobi Securities Exchange day’s average market rate at closing. This rate informs market participants of the level and
http://www.nse.co.ke/ direction of exchange rate movements. The reference rate is published to inform market
Central Bank of Kenya
https://www.centralbank.go.ke participants and the general public.
The CBK licenses foreign exchange bureaus, which were introduced in 1995 to enhance efficiency
in the FX market.
Repatriation
 Residents may import up to KES500,000 to cover expenses upon re-entry into Kenya.
 Non-residents may import local and foreign currencies without restrictions, but amounts
exceeding USD10,000 must be declared.
 Residents may export up to KES500,000 to cover expenses upon re-entry into Kenya. No
restrictions apply to foreign currencies.
 Exporters may retain all their export proceeds in foreign currency accounts with local banks,
or sell such proceeds to obtain local currency.
 Residents may borrow abroad with no limit on the amount; however, the government will
not guarantee any borrowing by the private sector.
 Persons leaving or entering Kenya are permitted to take from or bring into the country up to
KES500,000 of local currency. Amounts beyond these limits may be taken out or brought
into the country, provided they are declared at the point of departure or entry.
118
January 2023
Regulations
 FX bureaus are not allowed to establish correspondent account relationships. However,
authorised dealers are encouraged to open correspondent banking accounts, especially in
Tanzania and Uganda, to promote trade, investment and cultural exchange in the region.
 There are no restrictions on KES convertibility; however, local legal entities must state their
aims for buying foreign currency for statistical purposes.
 All local legal entities can conduct FX transactions but only via authorised local banks.
 There are some restrictions on capital transactions. Foreign exchange investment by
foreigners in shares (set in July 2002 at no more than 75 percent for both companies and
individuals on shares traded on the Nairobi Securities Exchange).
 FX investments exceeding USD500,000 by Kenyan residents outside the country require
approval from the central bank.
 Residents and non-residents are permitted to buy or sell foreign exchange, without
restriction, to and from authorised dealers up to the equivalent of USD10,000.
 Buying and selling of foreign currency is prohibited unless one of the parties to the transaction is
an authorised dealer licensed under Section 33(B) of the Central Bank of Kenya Act.
 All foreign exchange dealers must avoid engaging in speculative transactions that tend to
mislead other participants in the market and must also avoid misuse of privileged information.
 Foreign currency accounts may be opened and operated by Kenyan’s residents and non-
residents and the accounts may be allowed to overdraw in accordance with banking practices.
 FX bureaus are free to open and operate foreign currency accounts with authorised banks.
The bureaus, however, should not maintain foreign currency accounts in more than two banks
and there should be a minimum balance of the equivalent of USD2,000 in each account.
 Authorised banks are free to extend foreign currency-denominated credit facilities to
Kenya’s residents and non-residents subject to the prudential lending practices.
 Residents may borrow offshore. However, authorised dealers must pay due to the interests
of their customers and give them appropriate advice on the risks associated with offshore
borrowing.
 Inward investments are permitted. Non-residents are free to invest in real estate, equities,
money and stock exchange securities or other types of investments as appropriate.
119
January 2023
Kuwaiti dinar (KWD)
 The Central Bank of Kuwait (CBK) manages the KWD against a

dollar-heavy basket of currencies
 The KWD is fully convertible in the spot market

Onshore/Offshore  FX spot onshore and offshore
average daily spot USD500m
volume:  FX forwards out to 10 years
Onshore/Offshore
USD15m
spot transaction: Spot
Onshore/Offshore 10 pips The KWD is fully convertible in the spot market.
spot spread: (0.00010KWD)
Forwards
Onshore/Offshore
average daily USD200m The onshore forwards market is thin and traded out to six months. There is a liquid offshore
forward volume: market out to two years. Maturities of up to 10 years are available on request. There is a spread
Onshore/Offshore between onshore and offshore markets. Derivative trading between onshore and offshore banks
6M: USD25m
forward transaction:
has been permitted since 2014, reducing market fragmentation.
1M: 5 pips
Onshore/Offshore (0.00005KWD) Options
forward spread: 12M: 50 pips
(0.00050KWD) Trade in KWD options is rare. Options are usually traded versus the USD with a standard
Note: Spreads are subject to change with market transaction size of USD10m and a maximum tenor of two years.
developments.
Source: HSBC
FX framework
The CBK is responsible for monetary policy, including the management of the exchange rate.
Following its formation in 1969, the CBK set the value of the KWD against a basket of currencies. At
the start of 2003 it switched to a USD peg at KWD0.29963:USD1 with a ±3.5% band (KWD0.28914-
0.31011) to align Kuwait with the other Gulf Corporation Council (GCC) members in preparation for
the introduction of a single currency that was planned for 2010 but never came to fruition.
In May 2007, the CBK reverted to a currency basket regime, which began trading at a rate of
KWD0.28806:USD1. The composition of the basket has not been disclosed, but trades dollar-
heavy and officials report that it reflects Kuwait’s trade and capital account flows. The CBK
typically sets the value of USD-KWD at the start of the day (0800 local time), and there are
rarely intra-day adjustments. The offshore spot market is driven by flows and can trade as a
spread over the onshore price set by the CBK.
There is no clearing on Friday and Saturday.
120
January 2023
Note: Times given are Kuwait City local time = GMT + 3 hours
Source: HSBC

18 Feb Ascension of Prophet  The KWD is a deliverable currency.
Muhammad
25 Feb National Day  There are no restrictions on foreign exchange and repatriation for offshore trades.
26 Feb Liberation Day
 In November 2014, the CBK lifted restrictions on local banks trading derivatives (forwards,
27 Jun Arafat Day FX swaps, IRS, and options) with offshore banks.
28 Jun- Eid al-Adha
1 Jul
27 Sep The Prophet’s
Birthday
Central Bank of Kuwait
www.cbk.gov.kw
Ministry of Finance
www.mof.gov.kw
121
January 2023
Omani rial (OMR)
 The Central Bank of Oman (CBO) pegs the OMR to the USD
 The OMR is fully convertible
 Onshore banks cannot lend OMR offshore

Average daily spot
USD200m 
volume: FX spot
Spot transaction: USD15m  FX forwards out to three years with up to five years on request
5 pips
Spot spread:
(0.00005OMR) Spot
Average daily The OMR is fully convertible in the spot market and there is no spread between
USD100m
forward volume: onshore/offshore markets.
1M: 10 pips The OMR market is driven by commercial transactions. Liquidity is limited but sufficient to
(0.00010OMR) support commercial activity.
Forward spread:
12M: 70 pips
(0.00100OMR) Offshore banks can place OMR funds with onshore banks. Treasury bills (T-bills) are available
for commercial banks and local customers. Government of Oman Development Bonds can be
developments. purchased by overseas investors but holdings are very low.
Source: HSBC
Forwards/FX swaps
There is an onshore FX forwards market with tenors going out to one year for trade-related
commercial transactions. Onshore FX forwards must be able to show an underlying commercial
purpose. There is a spread between onshore and offshore markets.
Options
Trade in options is rare and the market is currently illiquid. However, trade in instruments out to
two years is available with standard ticket sizes of around USD10m.
FX framework
 The OMR is fully convertible and has been pegged at a midpoint of OMR0.3845:USD1
since January 1986.
 The CBO buys USD at OMR0.38400 and sells USD at OMR0.38500.
 There is no clearing on Friday and Saturday.
122
January 2023
Note: Times given are Muscat local time = GMT + 4 hours
Source: HSBC

11 Jan Accession Day  Banks’ FX exposure is restricted to 40% of their net worth.
Ascension of Prophet
18 Feb  FX forwards and swap transactions may only be used for trade-related transactions.
Muhammad
 Banks cannot lend OMR overseas or to offshore institutions.
28 Jun-
Eid al-Adha
1 Jul
The Prophet’s
27 Sep
Birthday
18-19 Nov National Day
Source: Bloomberg, Gulf Talent, HSBC
Central Bank of Oman
www.cbo.gov.om
National Centre for Statistics and
Information
www.ncsi.gov.om
123
January 2023
Polish zloty (PLN)
 The National Bank of Poland (NBP) oversees a free-floating currency

 The PLN is freely convertible and most commonly traded versus
the EUR
 Poland is a member of the European Union

Average daily 
EUR2.5bn Spot FX
spot volume:
Spot transaction: EUR10m  FX forwards out to two years
10 pips
Bid/ask spread:
(0.0010PLN)  FX options out to five years
Average daily
forward/swap EUR6-7bn Spot
volume:
Liquidity in the spot market is good with a normal bid/offer spread of 10 pips (0.0010PLN).
Forward transaction EUR50m
The standard market transaction size is EUR10m.
(3-month): (0.0005PLN)
Forwards/FX swaps
25-30 pips
Forward spread Forwards are traded on a deliverable basis. Forwards are quoted out to two years, although the best
(0.0025-
(12-month): liquidity is found in tenors of one year or less. Daily turnover of forwards and swaps is EUR6-7bn.
0.0030PLN)
Average daily option
EUR1bn Cross-currency swaps and interest rate swaps out to 10 years are available. Plain vanilla fixed rates
volume:
Option transaction: EUR50-100m for floating one-, three- and six-month Warsaw Interbank Offered Rate (WIBOR) swaps are common.
0.6 vol Options
spread (3-month):
Note: Spreads are subject to change with market PLN options are commonly issued against both the EUR and the USD. All PLN options expire at
developments.
Source: HSBC 1100 Warsaw local time. Options are available out to five years with both vanilla and exotic
options offered.
FX framework
The PLN is freely convertible. It is commonly quoted against the EUR and the USD.
The NBP determines monetary and foreign exchange policy. In 2002, Poland’s government
passed a FX law, bringing Polish regulations into compliance with EU standards. The same law
also removed all restrictions on capital flows between Poland and EU member states.
The Ministry of Finance is responsible for monitoring the foreign exchange activities of companies
and individuals.
The PLN operates under a free-floating regime; however, both the National Bank of Poland and
the Ministry of Finance are allowed to intervene in the FX spot market and can be seen both
buying and selling PLN sporadically.
124
January 2023
Note: Times given are Warsaw local time = GMT + 1 hour
Source: HSBC
2023 Holiday Calendar The NBP publishes fixing rates for crosses against the PLN every day a few minutes after 1100
1 Jan New Year’s Day Warsaw local time. These rates are used as benchmarks.
6 Jan Epiphany
Poland joined the European Union in 2004. The plan to join the eurozone in 2012 was shelved
when the country did not opt to enter the ERM-II mechanism in the second quarter of 2009,
1 May Labour Day
which was needed to keep to the adoption schedule. There is no new target date.
3 May Constitution Day
8 Jun Corpus Christi
15 Aug Assumption Day
11 Nov Independence Day
Repatriation of capital is unrestricted but must be reported.
25 Dec Christmas
26 Dec Christmas (2nd day) The 2002 Foreign Exchange Act (“the FX Act”) and secondary legislation made under the delegated
Source: HSBC authority contained in the FX Act outline regulations pertaining to foreign exchange turnover and
Additional Information transactions.28 Any legislative initiative in matters of foreign exchange belongs to the Minister of
National Bank of Poland Finance, which is the competent authority within the government to issue binding interpretations of
http://www.nbp.pl/ the FX Act.
Ministry of Finance
www.mofnet.gov.pl Restrictions on foreign exchange turnover provided for by the FX Act refer to transactions with so-
called third countries, i.e. countries that are not EU member states, and are not members of the EEA
or the OECD.
The restrictions concern the following areas:

 Transfer of funds designated to finance economic activity, including real estate purchases
 Transactions in securities with a maturity out to one year
 Transactions in debt claims
 Opening of bank accounts
International transfers and foreign exchange domestic settlements must be made via authorised
banks for transactions exceeding EUR15,000.
The restrictions and obligations laid down in the FX Act may be abolished by granting general or
individual foreign exchange permits.
General foreign exchange permits are granted by the minister responsible for public finance by way
of an ordinance, while individual foreign exchange permits are granted by the president of the NBP.
Applications for individual foreign exchange permits can be filed directly with NBP.
28 These include:
• Foreign Exchange Act of 27 July 2002
• Ordinance of the Minister of Finance of 20 April 2009 on General Foreign Exchange Permits
• Ordinance of the Minister of Finance of 29 June 2007 on the Procedure for Confirming Import and Export of Foreign
Exchange or Domestic Means of Payment, and the Specimen Declaration Forms concerning import into the country
and export abroad of these values and means of payment
• Ordinance of the Minister of Finance on the Technical and Organisational Conditions for the Conduct of Bureau de
Change Activities, the Detailed Manner of Maintaining Records, and Issuing Evidence of the Purchase and Sale of
Foreign Exchange, 24 September 2004
• Ordinance of the Minister of Finance of 18 August 2004 on the Specimen Form of the Application for Entry in the
Register of Bureaus de Change
Please see the NBP’s website for full details.
125
January 2023
Qatari riyal (QAR)
 The Qatar Central Bank (QCB) pegs the QAR to the USD
 The QAR is fully convertible and deliverable

Average daily spot USD50m
 FX spot
volume:
USD5m  FX forwards out to 10 years
Spot transaction:
200 pips Spot
Spot spread:
(0.0200QAR) The QAR is fully convertible. Market transactions are commercially driven.
Average daily forward USD100m
volume: The market became less liquid for a period in the second half of 2017 following the breakdown
USD10m of economic ties between Qatar and its neighbours, prompting a divergence between the
Forward transaction:
onshore and offshore markets. This has narrowed as ties have normalised but has not yet fully
1M: 10 pips
(0.0010QAR) faded. The QCB provides the required USD liquidity to onshore banks for all commercial
Forward spread:
12M: 40 pips requirements and to date remains committed to the USD/QAR peg rate of 3.6400.
(0.0040QAR)
Note: Spreads are subject to change with market Forwards
developments.
Source: HSBC The onshore FX forwards and deposit markets are very liquid in the short dates up to a month
and thin in tenors beyond, which stretch out to a maximum one year.
The offshore FX forwards market routinely quotes out to three years with maturities of up to
10 years available on request.
Options
Trade in the options market is rare with a standard ticket size of USD5m and a maximum tenor
of two years available on request.
FX framework
 The QCB introduced the QAR in 1973 and has pegged it against the USD since 1980 at a
midpoint of QAR3.6400:USD1.
 There is no clearing on Friday and Saturday.
126
January 2023
Note: Times given are Doha local time = GMT + 3 hours
Source: HSBC

14 Feb National Sports Day  The QAR is fully convertible and deliverable.
5 Mar Bank Holiday
 No controls are enforced on currency exchange or repatriation; however, the QCB monitors
28 Jun- Eid al-Adha the market.
1 Jul
18 Dec National Day
Notes: Some holidays depend on lunar sightings and
holidays may last for more than one day. Weekend is
Friday and Saturday.
Central Bank of Qatar
www.qcb.gov.qa
Ministry of Planning Statistics and
Development
www.mdps.gov.qa
127
January 2023
Romanian leu (RON)
 The National Bank of Romania (NBR) maintains a managed floating

exchange rate regime
 The RON is fully convertible and deliverable
 Romania is a member of the European Union

Average daily spot
EUR300m  Spot FX
volume:
Spot transaction: EUR5-10m  FX forwards out to three years
20 pips
Bid/ask spread:
(0.0020RON)  FX options out to two years
Average daily
EUR300-500m
forward volume: Spot
Forward transaction: EUR10-20m
The RON is freely convertible and trades mostly against the EUR. There is good liquidity when
(3-month): (0.0020RON) the local market is open.
Forward spread 100 pips Forwards/FX swaps
(12-month): (0.010RON)
FX forwards are fairly liquid, although liquidity and rates are dependent on local conditions.
Average daily
EUR10m
options volume:
Options
Options transaction: EUR10m
The options market is very illiquid with the best liquidity in EUR-RON options of one year or
2-3 vol
spread (3-month): less. Liquidity in USD-RON options is lower. Options expire at 1100 London local time. Only
Note: Spreads are subject to change with market vanilla options are offered. The maximum tenor offered is two years.
developments.
Source: HSBC
FX framework
The NBR is responsible for defining and implementing monetary and exchange rate policies,
managing foreign reserves, issuing banknotes, and regulating the banking system. Its main
objective is to ensure and maintain price stability.
The explicitly managed floating regime was adopted in 2005 when the NBR switched to an
inflation-targeting policy regime. The RON is mainly managed against the EUR. The central
bank may intervene directly in the spot market. The NBR also manages RON liquidity to prevent
any excessive or undesired movement of EUR-RON.
128
January 2023
Note: Times given are Bucharest local time = GMT + 2 hour
Source: HSBC

24 Jan Unification Day
Romania liberalised its capital account fully in 2006 prior to its entry into the EU in 2007.
14 Apr Orthodox Good Friday
17 Apr Orthodox Easter Monday  There are no restrictions on repatriating profits or remitting capital abroad.
1 May Labour Day
 Firms can borrow in foreign currency locally and internationally.
1 Jun Children’s Day
5 Jun Pentecost Monday  Firms are not required to exchange foreign currencies earned on exports.
15 Aug St Mary’s Day
30 Nov St Andrew’s Day
1 Dec National Day
25 Dec Christmas
26 Dec Christmas (2nd Day)
Source: HSBC
National Bank of Romania
www.bnr.ro
Ministry of Finance
www.mfinante.ro/engl
129
January 2023
Saudi riyal (SAR)
 The Saudi Arabian Monetary Agency (SAMA) operates a currency

peg to the USD at SAR3.75:USD1
 The SAR is fully convertible and relatively liquid
 The market is closed on Friday and Saturday
Normal Market Conditions Saudi Arabia has the most active and most liquid FX market in the MENA region. Products
Average daily spot USD2bn offered include:
volume:
 FX spot
Spot transaction: USD25m
10 pips  FX forwards quoted out to 10 years (liquid to five years)
Spot spread:
(0.0010SAR)
 Cross-currency swaps and interest rate swaps
Average daily USD5bn
forward volume:  FX options out to three years
Forward USD35m
transaction:  Asset liability Islamic hedges
1M: 15 pips
 Islamic options
(0.0015SAR)
Forward spread:
12M: 30 pips
(0.0030SAR)  Islamic FX (outright and forwards)
developments.  Islamic money market instruments
Source: HSBC
Spot
Liquidity in the spot market is good with a normal bid/offer spread of 2 pips (0.0002 SAR).
Forwards
The FX forwards market is the most liquid in the region. Forward transactions tend to be around
USD35m.
Swaps
Interest rate swaps (IRS) are actively used from a corporate hedging perspective. The average
size of IRS is USD15m.
Options
Transactions occur in a sporadic fashion, although good sizes can be transacted at times. The
standard size of transactions is USD50m with a maximum tenor of three years.
FX framework
The Saudi Arabian Monetary Agency (SAMA) is Saudi Arabia’s central bank and is responsible
for monetary policy and currency management. The SAR has been pegged to the USD at
SAR3.75:USD1 since 1986 and is fully convertible and liquid. As of 2013, the working week
runs from Sunday to Thursday.
130
January 2023
Note: Times given are Riyadh local time = GMT + 3 hours
Source: HSBC

22 Feb Founding Day
22-24 Apr Eid Al-Fitr  There are no restrictions on foreign exchange; however, the SAMA closely monitors all
27 Jun Arafat Day transactions.
28 Jun- Eid Al-Adha
1 Jul
23-24 Sep National Day
Saudi Arabian Monetary Agency
www.sama.gov.sa
General Authority for Statistics
www.stats.gov.sa
131
January 2023
South African rand (ZAR)
 The South African Reserve Bank (SARB) operates a managed

floating exchange rate system
 The ZAR is deliverable and largely convertible
 The SARB is gradually relaxing exchange rate controls

Average daily spot  FX spot and FX forwards
USD2-3bn
volume:
 FX options and structured forwards
75 pips  Cross-currency and interest rate swaps
Bid/ask spread:
(0.0075ZAR)
Average daily Spot
forward & swap USD8-10bn The ZAR is one of the more liquid EM currencies. The SARB maintains the ability to intervene in
volume:
the ZAR market as it sees fit, though much of the activity in the last few years (under normal
market conditions) was undertaken to build foreign reserves.
(3-month): (0.0020ZAR) Forwards/FX swaps/options
Forward spread 70 pips FX forwards and FX derivatives are available and actively traded. There is a well-developed FX
(6-month): (0.0070ZAR)
forwards and swaps market with an average daily turnover of around USD8-10bn per day.
Forward spread 130 pips The currency is deliverable and traded out to 10 years, though the best liquidity is in tenors of
(12-month): (0.0130ZAR)
two years or less.
Average daily
USD750m
options volume Some exchange controls are still in place but have been eased over the years.
Option transactions USD50-100m
The Johannesburg Stock Exchange (JSE) offers currency derivatives.
Implied option
0.4-0.5 vol
volatility spread
developments.
Source: HSBC
FX framework
The ZAR switched from a dual exchange rate system to a single freely floating currency in 1995.
The SARB reports to the Minister of Finance and is accountable to Parliament, but it is
autonomous in the execution of its duties. It has a mandate to maintain price stability through
inflation targeting. Currently, the inflation target range is 3-6%. In January 2009, a
reclassification of the inflation basket shifted the inflation target from CPIX (CPI excluding
interest on mortgage bonds) to CPI.
Since 1994 South Africa has gradually eased exchange controls. Further exchange control
reforms were announced by the Minister of Finance in the 2017 Budget regarding modernising
capital flow management.
132
January 2023
Note: Times given are Johannesburg local time = GMT + 2 hours
Source: HSBC
2023 Holiday Calendar Capital account management

1 Jan New Year’s Day The National Treasury undertakes a regular review of its capital flows management framework.
21 Mar Human Rights Day The government has taken the following steps to manage capital flows and support investment:
7 Apr Good Friday  Increasing the prudential limit: The prudential limit has been increased to 45% versus the
10 Apr Family Day previous 30% global limit and an additional 10% exposure for investments in other African
27 Apr Freedom Day markets outside of South Africa. The 45% prudential limit will apply to the foreign exposure
1 May Worker’s Day of retail assets for South African institutional investors.
16 Jun Youth Day
 Reforming loop structures: The loop structure29 provision was increased from 20% to a
9 Aug Women’s Day
maximum of 40% for bona fide business investment, growth and expansion transactions.
24 Sep Heritage Day
The previous minimum requirement of 10% has been abolished. This applies to companies,
16 Dec Day of Reconciliation
including private equity funds, provided that the entity is a tax resident in South Africa. Loop
25 Dec Christmas structures above the prescribed threshold will require the SARB’s approval with due
26 Dec Day of Goodwill consideration to transparency, tax, equivalent audit standards and governance.
Source: HSBC
 Modernising holding company (HoldCo) policy: The policy for holding companies was
extended to help South African companies expand; in particular, this will include financial
South African Reserve Bank
www.resbank.co.za services companies. Transfers to holding entities were increased from ZAR2bn to ZAR3bn
Ministry of Finance
for listed companies and from ZAR1bn to ZAR2bn for unlisted companies, subject to the
www.finance.gov.za SARB’s reporting requirements.
Southern African Development  Inward listings: The inward listing policy is aimed at deepening South Africa’s capital markets,
Community
www.sadc.int but it may create distortions. The National Treasury will release a comprehensive inward
South African Government Portal listings review paper, which addresses various matters, including the standards of reporting
www.gov.za and information provisions only, company track records, arms-length arrangements, valuation
South African Revenue Service of the acquiring company, management arrangements, funding arrangements, deployment of
www.sars.co.za
listing proceeds, due diligence, audit history, stakeholder protection, better treatment of
holders of securities, and confidence among market participants.
The SARB also releases circulars on a range of policy measures and updates. A full list of
recent circulars can be found on the SARB’s website.
In most cases, there are no restrictions on capital inflows, and incentives exist for companies
investing in certain industries or regions.
 Qualifying multi-national companies have been allowed to raise and deploy capital offshore
without exchange control approval since 1 January 2011.
 All incoming loans are still subject to the SARB’s approval, but securing a loan is a formality
within certain parameters. Electronic approvals are received on the same day.
Please see the SARB website for full details.
29 Loop structure is where a South African entity owns up to 40% of a foreign company, which then in turn holds investments in SA.
133
January 2023
Turkish lira (TRY)
 The Central Bank of the Republic of Turkey (CBRT) operates a

managed floating FX regime
 In recent years, the CBRT has used a different range of instruments
to better manage FX liquidity
 The TRY is freely convertible

Average daily spot  Spot FX
USD5bn
volume:
Spot transaction: USD10m  FX forwards and swaps
Bid/ask spread: 50 pips 
(0.005 TRY) FX options
Average daily Spot
USD3bn
forwards and swaps
volume: The TRY spot market is fairly liquid. While the minimum ticket size for interbank transactions is
Forward transaction: USD10-15m USD1m, there are no restrictions for other entities.
Forward spread 100 pips Forwards/FX swaps
(3-month): (0.01TRY)
TRY forwards trade on a deliverable basis. The best liquidity is in forwards of one year or less.
(12-month): (0.2 TRY) Exchange-traded USD-TRY futures are also available on Borsa Istanbul.
Average daily option Options
USD50-75m
volume:
Plain vanilla options are offered up to one year and the standard ticket size is USD10m.
Option transaction: USD10m
2.5 vol
spread (3-month): FX framework
developments.
Source: HSBC, CBRT
In 2001, Turkey abandoned its crawling peg system and allowed the TRY to float freely with the
occasional intervention by the CBRT. The CBRT’s objective is to achieve and maintain
price stability.
The CBRT was granted autonomy in 2001 in terms of functions and operations. The CBRT and
the Turkish government are jointly responsible for exchange rate policy and medium-term
(three-year) inflation targets. The CBRT maintains independence in terms of the tools it uses to
achieve its monetary policy goals.
The CBRT maintains the right to intervene in the currency market, when it deems this to be
appropriate (excessive volatility and loss in market depth). It may intervene directly or through
flexible auctions in the market.
In May 2019, a 0.1% FX transaction tax was reintroduced for individuals’ FX purchases, having
previously been abolished in January 2012. This tax was raised to 1% in May 2020 and cut to
0.2% in September 2020.
134
January 2023
Note: Times given are Ankara local time = GMT + 3 hours
Source: HSBC
Over the past few years, the CBRT has used a variety of different measures to manage FX
market liquidity.
2023 Holiday Calendar  From January 2017 to March 2019, the CBRT conducted daily auctions for foreign
1 Jan New Year’s Day exchange deposits against TRY deposits. The auction amount varied between USD0.3bn
21-23 Apr Ramazan Feast and USD1.25bn in 2017 and between USD0.5bn and USD1.5bn in 2018. The maximum
1 May Labour and total outstanding deposit amount in the auctions was initially planned to be USD10bn. The
Solidarity Day
19 May Youth and Sports CBRT ceased these auctions in March 2019.
Day
 From November 2017 to the end of 2018, the CBRT also conducted TRY-settled FX
29 Jun-2 Jul Sacrifice Feast
15 July Democracy and forward sale auctions. The amounts varied between USD100m and USD300m with
National Solidarity maturities of one month, three months, and six months. The maximum total position of
Day
30 Aug Victory Day
foreign exchange sales was initially planned to be USD3bn. The CBRT ceased these
29 Oct Republic Day auctions at the end of 2018. However, in December 2021, the CBRT announced that it
Source: HSBC would conduct, depending on market conditions, TRY-settled foreign exchange forward
sales with maturity of one month and three months to exporting and importing companies to
Additional Information:
Central Bank of the Republic of
manage exchange rate risk.
Turkey 
www.tcmb.gov.tr On 31 August 2018, the CBRT announced that “in addition to the TRY-settled forward FX
Banking Regulation and sale auctions held at the CBRT, transactions will also be conducted at the Derivatives
Supervision Agency Market (VIOP) operating under Borsa Istanbul (BIST) to contribute to the effective
www.bddk.org.tr
Turkish Treasury functioning of foreign exchange markets.”
www.treasury.gov.tr
 The CBRT also opened a TRY swap market to increase the efficiency in FX liquidity
management. These transactions started on 1 November 2018. A TRY swap market was
also opened under Borsa Istanbul where the CBRT has the right to participate.
 The CBRT has also altered the reserve requirement ratios for both TRY and foreign
currency deposits on different occasions in recent years to manage FX liquidity. The
different reserve requirement ratios can be found on the CBRT’s website30.
 On 1 December 2021, the CBRT intervened directly in the FX market for the first time since
2014. The central bank said its intervention was in response to “unhealthy price formations
in exchange rates”. On the same day, it also conducted transactions at Borsa Istanbul
Derivatives Market.
For more details on the CBRT’s FX instruments, please see: Monetary Policy and Liraization
Strategy for 2023.
Turkey is relatively liberal in its cross-border capital flow regulations compared to other
emerging markets. Decree 32 (1989) relaxed the rules on international capital flows. On
13 September 2018, a number of amendments were made to Decree 32, focused largely on
ensuring local contracts would be determined in local currency terms across a range of products
and sectors. Full details of the changes can be found via the official gazette web page.31
30
https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Core+Functions/Monetary+Policy/Reserve+Require
ment+Ratios/
31
http://www.resmigazete.gov.tr/eskiler/2018/09/20180913-7.pdf
135
January 2023

 The TRY is freely convertible.
 Companies and individuals may hold foreign currency accounts.
 Transfers greater than or equal to USD50,000 must be reported to the CBRT and the
Financial Crime Investigation Board within 30 days.
 Residents and non-residents may borrow both locally and abroad.
 There are no restrictions on the repatriation of capital.
 Generally, there are no restrictions on remitting profits or dividends once all applicable
taxes have been paid. However, note that temporary and limited restrictions were put in
place during the COVID-19 pandemic. These restrictions have been removed since
September 2020.
 On 15 August 2018, the Banking Regulation and Supervision Agency (BDDK) announced
new limits for onshore-offshore FX transactions. The announcement stated that the “total
notional principal amount of a bank’s currency swaps and other similar products (spot +
forward FX transactions) with foreign counterparties where at the initial date a local bank
pays TRY and receives FX should not exceed 25% of a bank’s regulatory capital. In this
regard, unless the current excess is eliminated, no further transactions of these types could
be executed and maturing transactions should not be renewed. The above-mentioned ratio
should be calculated daily on a consolidated and individual basis”. On 17 August 2018, the
regulator widened the restrictions to cover options and other non-swap derivative
instruments. On 17 September 2018, the BDDK introduced some limitations around how
different maturities would be treated under this regulation. The parameters of the regulation
have been changed on several occasions since its introduction – for example:
 On 25 September 2020, the regulator changed regulations when a bank receives TRY at
maturity date (‘wrong-way’ transaction) to 10% (from 1%) of a bank’s regulatory capital
 On 11 November 2020, the regulator limited local banks’ FX swaps, forwards and other
derivatives operations with non-residents, where at the maturity date a local bank pays
TRY and receives FX, with a maturity of seven days or less to a maximum 5% of a
bank’s regulatory capital (versus 2% previously). With maturity of 30 days or less the
maximum is set at 10% of a bank’s capital (5% previously). The maximum is set at 30%
of a bank’s capital (20% previously) for transactions with maturity of one year or less
 In January 2022, a new regulation on local exporter and tourism revenues was announced.
According to the new regulation, 25% of the export proceeds must be converted to TRY
with the CBRT via intermediary banks. Under the current requirement, exporters are
expected to transfer export proceeds within 180 days of custom declaration. The conversion
is made at the CBRT’s fixings (six fixings are available between 1000 and 1500 local time).
Following the conversion, exporters can freely use the converted TRY, including purchasing
back foreign currencies in the FX market. The regulation applies only for export proceeds in
USD, EUR and GBP. In May 2022, this ratio was raised to 40%.
 In October 2022, a change to commercial TRY loans for FX-holding companies was
announced. A company subject to independent audit will not be able to get new local-
currency (TRY) loans, if it holds more than TRY10m (cUSD538k) in foreign exchange cash
assets and they exceed 5% of total assets or annual sales. The previous limits introduced in
June 2022 were TRY15m and 10%.
 There has been an increase of RWA consumption (500%) for corporate loans that execute
derivatives with offshore names.
136
January 2023
UAE dirham (AED)
 The Central Bank of the United Arab Emirates pegs the AED to the
USD
 The AED is fully convertible in the spot market
 Onshore banks can lend AED deposits to offshore banks, subject to
a 30% reserve maintained at the central bank
Normal Market Conditions The UAE has the second most liquid and developed FX market in the region after Saudi Arabia.
Average daily spot The following products are available:
USD2bn
volume:
 FX spot
2 pips  FX forwards out to 10 years
Spot spread:
(0.0002AED)
Average daily Spot
USD4bn
forward volume: The AED is fully convertible in the spot market and there is no spread between onshore and
Forward transaction: 12M: USD25m offshore markets.
1M: 3 pips
(0.0003AED) Forwards/FX swaps
Forward spread:
12M: 10 pips The FX forwards market extends to five years with maturities of up to 10 years available on
(0.0010AED)
request. Onshore banks can lend AED deposits to offshore banks, subject to a 30% reserve
developments. that needs to be maintained at the central bank. They can sell or buy AED through swaps.
Source: HSBC
Onshore banks can lend AED via swaps to offshore banks. There is a spread between onshore
and offshore markets for forwards.
Options
Transactions in the options market occur in a sporadic fashion, and options are offered mainly
against the USD. The standard size of a transaction is around USD25m with options offered out
to three years.
FX framework
 The central bank of the UAE formulates and implements the country’s banking, credit and
monetary policy. Its policy anchor is the AED peg to the USD, which has been maintained
at AED3.6725:USD1 since 1980.
 The central bank sells USD at AED3.6730 and buys USD at AED3.6720.
 There are no restrictions on foreign exchange, although the central bank closely monitors
the market.
 UAE switched to a Monday to Friday (half day) work week from January 2022.
137
January 2023
Note: Times given are Abu Dhabi local time = GMT + 4 hours
Source: HSBC

22-24 Apr Eid al-Fitr  The AED is fully convertible and there are no restrictions on exchange or repatriation.
27 Jun Arafat Day  Onshore banks can lend AED deposits to offshore banks, subject to a 30% reserve
28 Jun- Eid al-Adha
1 Jul maintained at the central bank.
29 Sep The Prophet’s Birthday
1 Dec Commemoration Day
2-3 Dec National Day

may differ slightly from the dates given. As of Jan
22, weekend is Saturday and Sunday.
Central Bank of UAE
www.centralbank.ae
Ministry of Finance
www.mof.gov.ae
138
January 2023
Ugandan shilling (UGX)
 The de jure exchange rate arrangement is free-floating

 There are no capital controls
 In the offshore market, the UGX trades on a non-deliverable basis,
whereas onshore there are active spot and forwards markets
The Foreign Exchange Act (FEA), 200432 amends and consolidates the laws relating to foreign
exchange in Uganda: to provide for the exchange of foreign currencies in Uganda and the
Onshore average
USD30-50m making of international payments and transfers of foreign exchange, and for other related and
daily spot volume:
Onshore spot incidental matters. The Ugandan FX market is comprised of two main products:
USD1-5m
transaction:
 Spot FX
Onshore bid/ask 10 pips
spread: (10.00UGX)  FX forwards
Onshore average
daily forward USD20-40m Spot
volume: The Bank of Uganda (BOU) is authorised to grant licenses to deal in foreign exchange.
Onshore forward Authorised dealers (ADs) include commercial banks and foreign exchange bureaus. ADs may
12M: USD5m
transaction:
freely determine their bid-ask spreads and foreign exchange commissions in transactions in the
1M: 5 pips
Onshore forward (5.00UGX) retail market with their clients. However, ADs that participate in the wholesale market must
spread: 12M: 25 pips maintain a UGX10 spread on the bid-ask quotes they post on the Reuters Dealing System.
(25.00UGX)
Offshore average The daily official exchange rate is calculated as the mid-rate computed from the simple average
daily forward USD5-10m interbank exchange rates for purchases and sales of foreign exchange. The BOU’s foreign
volume:
exchange transactions with the government (Ministries, Departments, and Agencies) are
Offshore forward
12M: USD5m conducted at the day’s opening spot rates.
transaction:
1M: 10 pips Forwards
Offshore forward (10.00UGX)
spread: 12M: 40 pips Although the UGX is a fully convertible currency, an offshore NDF market is present. Authorised
(40.00UGX) banks may deal with customers in the forward exchange market and enter into forward
developments. exchange contracts with their customers at market-determined exchange rates in currencies of
Source: HSBC
their choice. There are no limits on the amount or period of cover. However, market clearing
liquidity is good only up to 12-month tenors. The BOU occasionally participates in the onshore
forward foreign exchange market.
32 https://www.bou.or.ug/bou/bouwebsite/bouwebsitecontent/acts/supervision_acts_regulations/FX_Acts/FXAct2004.pdf
139
January 2023
Note: Times given are GMT
Source: HSBC

26 Jan Liberation Day History
16 Feb Arch Janan Luwum Day In the immediate post-independence era (after 1962), Uganda pursued an inward-looking import
8 Mar Women’s Day substitution trade and industrial strategy with a fixed exchange rate regime. For most of the
7 Apr Good Friday 1970s, the official exchange rate with the USD was held close to the original rate at which the
10 Apr Easter Monday East African shilling had been fixed, which the Uganda shilling inherited in 1966 (following the
24 Apr Eid Al-fitr
dissolution of the East African Currency Board).
1 May May Day
3 Jun Martyr’s Day In 1981, to correct the exchange rate distortion an adjustment programme was initiated. Its
9 Jun Heroes Day centrepiece was a substantial devaluation of the shilling, followed by a further devaluation in
29 Jun Eid Al-adha July 1982. By the end of 1986, a fixed rate system was established, but this further aggravated
9 Oct Independence Day the external disequilibria in the economy. This then led to a currency reform in May 1987, in
which one hundred shillings were exchanged for one new shilling, and the shilling devaluated by
26 Dec Boxing Day
77% in an attempt to address external imbalances.
The policy of maintaining the real effective exchange rate constant (a ‘crawling peg’ system)
Central Bank of Uganda was introduced in October 1989 and, in July 1990, the parallel foreign exchange market was
https://www.bou.or.ug/bou/bouwebsite legalised, leading to the establishment of foreign exchange bureaus. In January 1992, a foreign
/BOU-HOME
exchange auction system was introduced, marking a move towards a market-based exchange
Ministry of Finance
https://www.finance.go.ug/ rate regime. Although exchange rates were determined by the market, the FX market remained
segmented. To eliminate this, an interbank foreign exchange market system was introduced in
November 1993.
Subsequently, in April 1994, the government accepted the obligations of Article VIII, Sections 2,
3 and 4 of the IMF’s Articles of Agreement, expressing its commitment to a free and open
exchange rate system33.
Current framework
 The de jure exchange rate arrangement is free-floating. The authorities intervene in the
foreign exchange market when short-term fluctuations jeopardise its orderly operation.
These interventions take place through auctions in the interbank foreign exchange market
(IFEM) at the banks’ quoted rates. The BOU publishes information on its interventions in its
monthly, quarterly and annual reports, including amounts purchased and sold through the
reserve build-up programme, interventions and targeted transactions.
 The mode of interventions deployed for discretionary and reserve accumulation
interventions are quite similar, i.e. conducted using the bid-ask principle by hitting banks on
their quoted prices as displayed on the Reuters page UGX1=, which had been instituted to
establish a market-making mechanism in the IFEM. However, the targeted specific sale
interventions are predominantly conducted on the weighted average rate derived by using
traded volumes of banks times their respective quoted price.
33
https://www.bou.or.ug/bou/bouwebsite/bouwebsitecontent/research/BoUworkingPapers/research/BouWorkingPapers/2020/BoU_W
P12_2020-Long-Run-Exchange-Rates-Dynamics-in-Uganda-Evidence-from-the-Sticky-Price-Monetary-Model.pdf
140
January 2023
Foreign exchange business and international payments

 There are no restrictions on foreign exchange bureaus accounts abroad, although their
operations are limited to spot transactions and OTC purchases and sales of foreign currency.
While the FEA Act governs the repatriation of funds outside Uganda, there are currently no
exchange control restrictions, except for the fact that all payments in foreign currency, to or from
Uganda, between residents and non-residents, or between non-residents, must be made
through a bank or through a person licensed to carry out the business of money transfers.
 Residents are free to open accounts in domestic or foreign currency locally, and/or in
foreign currency abroad. Non-residents are free to open and maintain foreign exchange
accounts and domestic currency accounts.
 A person who wishes to purchase/sell foreign exchange to any person licensed to transact
as a forex bureau may do so and shall obtain an official receipt from the BOU or any other
receipt approved by the BOU in respect of the transaction, clearly indicating the source of
the funds or the purpose for which the funds are purchased.
 Receipts and payments above USD5,000 or the equivalent in any other foreign currency,
shall be notified to the BOU immediately and, in any case, not later than the following day
after receipt or payment.
 Authorised payments, including import payments to non-residents, may be made in shillings for
credit to a non-residents account in Uganda or in the currency of the country of residence of the
payee. Other convertible currencies may also be accepted for international payments.
 The daily foreign exchange open position of authorised financial institutions must lie within
±25% of a financial institution’s core capital in the previous quarter34.
 Lending in foreign currency locally shall have a maximum maturity of not more than one
year unless the borrower has a clearly defined income stream in the currency being
borrowed that matches the long-term maturity of the loan, and it may not exceed in
aggregate 80% of a bank’s total foreign currency deposits.
Capital transactions
 All inflows and outflows under this regulation shall be received through banks and every
licensee shall submit to the BOU all reports of capital flows arising from any transactions,
including overseas investment, ownership of shares of foreign companies and dividends
from such investments.
 A bank may receive funds denominated in foreign currency on behalf of its customers in
accordance with a loan contract and a copy of the loan agreement and disbursement
schedule, where applicable, shall be submitted to the BOU for registration at the time of
receipt of the funds. A bank may transfer funds in accordance with the loan contract and
repayment schedule on behalf of a customer.
Other regulations
 The Anti-Money Laundering (AML) Act requires people who intend to physically carry cash,
whether local or foreign currency, or negotiable bearer instruments in excess of
UGX30,000,000 (approximately USD8,100) across the national borders of Uganda to notify
the Uganda Revenue Authority by filling in a prescribed form.
34 Foreign Exchange Business Rules, 2010:

https://www.bou.or.ug/bou/bouwebsite/bouwebsitecontent/acts/supervision_acts_regulations/FI_Regulations/FI_Foreignexc
hange_2010.pdf
141
January 2023
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142
January 2023
Latin America
143
January 2023
Argentine peso (ARS)
 The central bank maintained a managed crawling FX regime in 2022,

resulting in further appreciation of the real exchange rate
 Despite the maintenance of FX controls, a wide gap remains
between the official and unofficial FX rates
 The government continues to work with the IMF as a key funding
source
The following products are available:

 Spot FX35
Onshore average  Non-deliverable forwards on a case-by-case basis
USD250-300m
daily spot volume:
Onshore spot  Non-deliverable options on a case-by-case basis
USD1m
transaction:
Onshore bid/ask 100 pips  Domestic money market products
spread: (0.0100ARS)
Onshore average Spot
USD350-400m
daily futures volume: The spot exchange rate is traded locally in two markets: the MAE (Mercado Abierto Electrónico
Onshore futures
USD1m – electronic securities exchange) and the MEC (Mercado Electrónico de Cambios). The MAE is
transaction:
Onshore futures 300 pips a pure bank-to-bank market, while the MEC is intermediated by brokers. The Monetary Authority
bid/ask spread: (0.0300ARS)
and, to a lesser extent, the Treasury intervene in both markets. The Banco Central de la
Offshore average
USD0-5m República Argentina (BCRA), Argentina’s central bank, undertakes discretionary interventions to
daily NDF volume:
NDF average avoid destabilising movements in the exchange rate. These interventions may involve both
USD0-3m
transaction:
500-100,000 purchases and sales of USD, depending on prevailing market conditions.
NDF bid/ask
pips (0.05-
spreads: Forwards/FX swaps
10.0ARS)
Note: Spreads are subject to change with market The offshore market consists exclusively of non-deliverable forwards (NDFs), but liquidity in this
developments
Source: MAE, MEC, HSBC
market has diminished significantly since the imposition of FX controls and the wider divergence
between official and unofficial FX rates. Onshore, the ARS is most commonly traded as a NDF
for customer flows. Onshore futures volumes include the ROFEX (the Rosario Futures
Exchange) and the MAE. The onshore market is also less liquid since the imposition of FX
controls in late 2019.
Options
The currency options market for the ARS is small and illiquid. Prices are quoted on a case-by-case
basis, depending on prevailing conditions.
35
Spot available onshore only.
144
January 2023
Note: Times given are Buenos Aires local time = GMT - 3 hours
Source: HSBC

20 Feb Carnival  The BCRA has pursued a managed floating regime for the exchange rate since
21 Feb Carnival convertibility was abandoned in December 2001. Due to the country’s higher inflation rate
24 Mar Memorial Day relative to its trade partners, the nominal ARS spot rate would need to weaken versus its
2 Apr Malvinas Veterans Day trading partners’ currencies to maintain a stable real exchange rate.
7 Apr Good Friday
1 May Labour Day  The BCRA introduced FX controls on 1 September 2019, which are still in place, with
25 May May Revolution Day specifications frequently being changed. The controls oblige exporters to sell FX proceeds
26 May Tourism Holiday in the local official FX market (MULC). FX purchases in the official market are only possible
19 Jun Tourism Holiday under certain circumstances and within certain limits. Individuals and companies have to fill
20 Jun National Flag Day out affidavits or provide information to banks, which are responsible for checking that they
9 Jul Independence Day meet the criteria allowing access to the MULC. Operations outside of these criteria are
21 Aug Death of Gen San Martin
deemed to require authorisation from the BCRA, which may imply they are not possible.
13 Oct Columbus Day/Cultural
Diversity  As a result of the controls, local agents have turned to alternative ways to effectively
6 Nov Bank Holiday
exchange ARS for foreign currency, via publicly traded securities (most commonly via the
20 Nov National Sovereignty Day
purchase of USD-denominated Treasury bonds in exchange for either local or foreign
8 Dec Immaculate Conception
Day currency). These are known as “blue-chip-swap” (BCS) or “MEP” operations (the former
25 Dec Christmas Day involving the trading of off-shore custody, the latter involving local settlement). The ARS has
Source: Ministry of Interior, Bloomberg
traded at a discount using the BCS FX rate compared to the MULC FX rate since the
Additional Information reintroduction of controls. While BCS and MEP operations are legal, local regulators have
Central Bank of Argentina discouraged them by either imposing holding periods for the securities involved, setting up
www.bcra.gov.ar
Ministry of Economy and Production temporary windows around the use of BCS/MEP where the use of the MULC is not allowed
www.mecon.gov.ar or not allowing those who use receive any type of government subsidy (social assistance or
AFIP energy subsidies) to trade local currency securities in exchange for FX. The latter can also
www.afip.gov.ar
Fixing Page be seen as a way to encourage individuals to give up government subsidies.
www.mae.com.ar/mercados/forex/
default.aspx Fixing mechanism for offshore NDFs
 The fixing is two business days prior to the value date of the forward.
 The fixing rate is based on the weighted average price of all trades done on the electronic
open market as published on the MAE website at 1500 local time.
 For offshore NDFs entered into, on or after 7 October 2019, the new EMTA (Emerging
Market Traders Association) template dated 7 October 2019 is used. With respect to these
offshore NDFs, there will be no “Exchange Rate Divergence”36, and the fixing rate published
on the MAE will be used for fixing so long as that rate is available.
Fixing mechanism for onshore forwards

 The fixing is on the last working day of each month.
36
Note that “Exchange Rate Divergence” refers to a clause in offshore NDF contracts that is triggered when five market
participants that are EMTA members deem that the standard fixing rate no longer reflects the actual prevailing USD-ARS
rate for a standard size transaction for same-day settlement on the valuation date. Legal counsel should be sought for any
clients with outstanding ARS NDFs that were entered into before 7 October 2019, as trades with certain counterparties
were amended to remove “Exchange Rate Divergence”, while those with other counterparties are still subject to valuation
postponement due to “Exchange Rate Divergence.”
145
January 2023
 The fixing rate is determined by the central bank’s reference rate, based on Communiqué
A350037, which is the simple average of a poll of banks conducted during three periods of
the day: 1000-1059, 1200-1259, and 1400-1459 local time, via the MAE.
The regulatory framework is subject to change, with the latest regulatory framework usually
available on the BCRA’s website. The following are the regulations pertaining to the MULC,
according to the type of operation.
 Goods exports: Exporters have to settle transactions with foreign currency proceeds and
convert them to ARS, within five business days after collecting the funds. Some activities
have been granted a more favourable FX rate for a limited period. This was the case of
soybean exporters during most of September 2022. Ad hoc policies for certain sectors are
possible in the future.
 Services exports: Exporters have to settle and convert their USD proceeds to ARS no
more than five business days from the date of the receipt or the deposit in foreign accounts.
Exporters related to knowledge and digital services can keep up to 20% of their proceeds in
USD in a local USD-linked account. Exports related to tourism services have been
exempted since November 2022 in an effort towards enabling incoming tourists to receive a
rate equivalent to the MEP/BCS rate.
 Imports of goods and services: Outflows above USD10,000 per day have to be reported
to the BCRA. Banks must check that the importer makes the corresponding declarations
and meets the requirements under the controls scheme. Import payments have been
increasingly restricted since 2019. A new regime launched in October 2022 (“SIRA” for
goods and “SIRASE” for services) aims at giving certainty over the timing of access to the
FX market. Authorisation for access to the MULC is up to the tax authority, the Ministry of
Economy and the central bank. The criteria to allow access are related to the risk profile
and the economic and financial capacity of the importer. Imports of inputs for the
healthcare, food & energy and oil industries are exempted from the system. Importers can
also use their own FX holdings for payments as a way to obtain permission to execute
transactions through the system.
 External debt: External debt payments with related creditors are not possible without the
BCRA’s authorisation. Starting in 2020, companies that had to make debt payments to an
unrelated creditor larger than USD1m, in any month, have been instructed to restructure
their debts. Under that instruction, debtors would only be allowed to buy FX for up to 40% of
the original amount they had due, while showing that they had refinanced the rest with an
average life of two years. These rules have been extended until December 2023.
 Credit and debit card FX purchases: Individuals can make purchases in foreign currency
with credit or debit cards without limit but at a more expensive exchange rate than the official
one. Since December 2019, a 30% tax has been applied to FX purchases; since July 2022, an
extra 45% surcharge, deductible from income tax, is now applied. Since October 2022,
individuals who make purchases of more than USD300 in a given month have to pay an
additional 25% surcharge, deductible from their income or property tax. These deductions
become effective the following year, with inflation thereby reducing their value.
37
See: http://www.bcra.gob.ar/Pdfs/comytexord/A3500_i.pdf
146
January 2023
 Other FX purchases: individuals can buy up to USD200 per month in the MULC, subject to
several restrictions. The amount used in credit and debit cards FX purchases is deducted
from the USD200 allowance. The purchase is subject to the 30% tax and a 35% withholding
for income tax. Individuals receiving any type of social assistance programme or
government subsidy are not allowed to make purchases. For all entities other than
individuals (e.g. companies, banks, government entities, etc.), all FX purchases are bound
by the above-mentioned BCRA authorisation. On a general basis, non-residents are not
allowed to access the FX market to repatriate funds without prior central bank authorisation.
 Capital goods purchases: Rules on foreign capital goods purchases by Argentine firms
are governed by section 10.11.7 of BCRA Communication “A” 7408, December 2021.
 Dividend payments: Companies must obtain prior authorisation from the BCRA before
transferring profits and dividends abroad. It is possible to make dividend payments for up to
30% of the capital injections made via the MULC since the controls were enacted in
September 2019.
 Investment repatriation: The BCRA’s regulation currently states that companies will be
able to repatriate direct investment flows brought via the MULC after a minimum holding
period of one year (if the capital injection is proven to be related to a project with a positive
impact on exports) or of two years (no restrictions). Specific regulations pertaining to the
energy sector (Decree 277/22 and norm A7626) allow companies to repatriate a
percentage of the investment (depending the product) provided the company increased
exports in 2022 compared to a baseline in 2021. The amount will be determined by the
certificate approved by the central bank.
Companies and investors doing business in Argentina should consult legal and tax advisors for
the latest FX regulations and any developments in the foreign exchange market.
147
January 2023
Brazilian real (BRL)
 The Banco Central do Brasil (BCB) operates a managed floating FX

regime with periodic intervention in FX swap and spot markets
 The BRL is fully deliverable onshore but is non-deliverable offshore
 Liquidity is highly concentrated in the first USD future contract traded
through the Brazil, Stock and Over-the-counter market (B3 S.A. –
Brasil, Bolsa, Balcão) with a daily average volume of USD15bn

Onshore average daily  Spot FX38
USD2bn
spot volume:
Onshore spot transaction  Non-deliverable forwards (NDFs)
USD10m
average:
10 pips  FX options
Onshore bid/ask spread:
(0.0010BRL)
Onshore first future daily  Interest rate and cross-currency swaps
USD15bn
volume:
Onshore first future USD-  Money market and fixed income products
USD10m
BRL contract size:
Onshore average daily  Total return swaps (TRS), access notes and BRL-linked notes offshore
USD3bn
NDF volume:
Onshore average forward Spot
USD5m
transaction size:
1M: 10 pips The onshore market is liquid with daily spot turnover of about USD2bn, including commercial,
Onshore forward spread:
(0.0010BRL) financial and interbank trades. However, most spot volume is traded via the first futures contract
Offshore average daily on the Brazil, Stock and Over-the-counter market (B3)39, which registers an average USD15bn
USD4bn
NDF volume:
Offshore average NDF in turnover per day. The market in Brazil is open from 0900 local time to 1800 local time. Spot
USD10m
transaction size: can be traded only onshore.
Offshore average NDF 10 pips
spreads: (0.0010BRL) Forwards/FX swaps ‒ offshore
Average daily options
USD1.5bn In the offshore markets, the most common forward products are USD-settled non-deliverable
volumes:
Average options forwards (NDFs). The offshore market is generally liquid with the best liquidity in tenors of two
USD50m
transaction size: years or less and an estimated USD3bn in daily average traded volume.
3M: 0.4 vol
spread: The most common interest rate swap is a fixed USD rate versus an interbank deposit certificate
Source: HSBC
(or CDI – the overnight interbank rate published by the main securities depository B3), net
settled in USD offshore. This allows offshore customers to access a proxy of the local interest
rate swap market.
38
Spot FX transactions can only be carried out onshore.
39
On 30 March 2017, BM&F Bovespa merged with CETIP, creating B3 (in full, B3 S.A. – Brasil, Bolsa, Balcão S.A. or B3).
The B3 is the major Brazilian Stock and Over-the-counter market.
148
January 2023
Notes: São Paulo local time = GMT - 3 hours
Source: HSBC
Forwards/FX swaps ‒ onshore

2023 Holiday Calendar The following products are available onshore: deliverable forwards, NDFs and currency swaps,
1 Jan New Year’s Day net settled in BRL or settled in other currencies indexed to the BRL.
20 Feb Carnival
21 Feb Carnival Options
7 Apr Good Friday In both onshore and offshore markets, USD-BRL non-deliverable options (NDOs) are traded,
21 Apr Tiradentes Day while interest rate options are offered in the offshore market. NDOs can be traded as vanilla or
1 May Labour Day exotic options with liquidity going up to two years.
12 Oct Our Lady of Aparecida Day FX framework
2 Nov All Souls Day
15 Nov Proclamation of the The Banco Central do Brasil (BCB) is responsible for managing currency intervention and
Republic Day setting short-term interest rates. The BCB monitors foreign investments and currency exchange.
FX regulations are set by the National Monetary Council (Conselho Monetário Nacional – CMN)
Source: ANBIMA, Bloomberg
and by the BCB. Brazil’s government also enacts laws that may affect the movement of foreign
capital. The Monetary Policy Committee (Comitê de Política Monetária – COPOM) sets the
Banco Central do Brasil
Ministry of Finance target for the benchmark Selic rate, which is the overnight government bond repo rate.
www.bcb.gov.br
www.fazenda.gov.br
B3 - Brasil Bolsa Balcão Over the last decade, the CMN and the BCB have been gradually lifting restrictions from Brazil’s
www.b3.com.br foreign exchange markets. In May 2019, the BCB announced plans to gradually make the BRL fully
Securities and Exchange convertible in 2-3 years (Reuters), but there has been little notable progress on this project, in part
Commission of Brazil (CVM)
www.cvm.gov.br perhaps due to the COVID-19 pandemic. In February 2021, Brazilian legislators passed into law a bill
Reuters Fixing Page that gives the central bank autonomy from political interference.
BRFR
In the past, during periods of strong BRL appreciation the authorities have implemented measures
to limit portfolio inflows and/or reduce USD selling pressures, while some measures have also
been periodically implemented to limit BRL weakness. In recent years, the central bank has
indicated that any intervention efforts are generally aimed at providing liquidity where needed,
as well as reducing market volatility.
 The BCB intervenes intermittently in the BRL market via the sale/purchase of USD in the
spot market and/or cross-currency swap auctions (swaps and reverse swaps).
 The swaps the BCB uses to intervene are cross-currency swaps with fixed USD versus floating
Selic legs. In a regular swap – used by the BCB to supply the market with USD – market
participants (swaps sellers) pay the overnight Selic rate to the BCB (swaps buyer) and receive
USD on a specific BRL principal amount at a fixed rate. Market participants, therefore, assume
both interest rate and exchange rate risks. The swaps are settled in BRL like all other future
contracts on the B3 and settle daily (not at maturity). Reverse swap refers to the inverse
(opposite) transaction, which the BCB has used in the past to limit BRL appreciation.
 Additional USD credit line auctions can take place on an ad hoc basis when considered
appropriate. Also, on occasion in the past, the government has imposed IOF (Imposto sobre
Operações Financeiras) financial transactions taxes on foreign inflows into the local bond
market and on short USD positions at the futures market. These are currently set at 0%.
149
January 2023

 The BRL operates under a managed float and the BCB can intervene through the spot,
swaps and/or futures markets.
 USD-BRL is the only currency pair regularly traded in the domestic interbank spot foreign
exchange market. Interbank spot FX transactions with other convertible currencies are
regularly booked on international FX markets between domestic and foreign financial
institutions (e.g. EUR-USD, USD-JPY, etc.).
 The reference rate for the interbank spot USD-BRL market is the PTAX average rate and is
calculated as the arithmetic average of four daily snapshots, where authorised foreign
exchange dealers must inform the BCB of bid/offer rates. The snapshot windows for the
PTAX calculations are 1000-1010, 1100-1110, 1200-1210 and 1300-1310 local time.
NDF fixing mechanism

 Onshore BRL-settled NDFs are typically fixed one day prior to settlement based on the
PTAX offer rate.
 Offshore Brazilian NDFs are fixed two days prior to settlement through the PTAX offer rate.
 Exchange-traded USD-BRL futures are available in both Chicago and São Paulo.
Regulations
The foreign exchange normative framework is constantly renewed through the enactment of
BCB Circulars and the National Monetary Council Resolutions. The current framework40 for
foreign exchange transactions in Brazil is broad and there are several rules that cover foreign
exchange transactions and other cross-border matters.
Spot
 FX transactions must be registered with the BCB and booked against a financial institution
authorised to deal FX by the BCB.
 FX transactions between Brazilian financial institutions (interbank transactions) can be
settled OTC or through the B3 Foreign Exchange Clearinghouse (BMC), in operation since
April 2002. The vast majority of the gross volume of the interbank spot FX market is settled
through the BMC.
 FX transactions between Brazilian financial institutions and their customers (non-interbank
transactions) are available for any currency pair formed by the BRL and a convertible
currency. The FX transaction must be linked to an authorised underlying transaction by way
of documents filed with, or at least readily available to, the authorised financial institution
with which the FX transaction is booked.
40
The Laws no: 4,131 and no: 4,390 of 3 September 1962 and 29 August 1964, respectively, and both laws are regulated
by Decree No. 55,762 of 17 February 1965; the Law no: 11,371 of 28 November 2006, the provisory measure no: 2,224 of
4 September 2001, the Law Decree no: 9,025 of 27 February 1946, the Decree no: 23,258 of 19 October 1933, the Law no:
9,529 of 10 December 1997, the Resolutions enacted by the National Monetary Council (Resolution no: 4,074 of 26 April
2012; Resolution no: 3,844 of 23 March 2010; Resolution no: 3,568 of 29 May 2008; Resolution no: 3,312 of 31 August
2005; and Resolution no: 4,373 of 29 September 2014) and the Circulars enacted by the BCB (Circular no: 3,689 of 16
December 2013; Circular no: 3,690 of 16 December 2013; Circular no: 3,688 of 16 December 2013; Circular no: 3,691 of
16 December 2013 and Circular no: 3,592 of 2 May 2012).
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January 2023
Onshore forwards and options

 Onshore deliverable FX forwards are available in the non-interbank market comprised of
the BRL and any other convertible currency. Tenors are generally limited to 360 days.
Deliverable forwards related to Brazilian exports are allowed for tenors up to 750 days and
interbank transactions up to 1,500 days.
 To avoid backdated transactions, all OTC non-deliverable derivatives must be registered at
the B3, which also monitors pricing appropriateness. In addition, the BCB and the CVM
(Comissão de Valores Mobiliários – Brazil’s Securities Commission) have access to all
transactions registered at the B3, which ensures full transparency to the regulators.
Offshore derivatives
 The most tradable instruments offshore are NDFs and cross-currency swaps (CDI versus
USD fixed).
Cross-border derivatives
 While foreign corporations and individuals have extensive access to Brazil’s exchange-
traded and OTC derivatives markets, domestic corporations and individuals domiciled in
Brazil have limited access to offshore derivatives markets.
 Derivative contracts with foreign counterparties are available only to Brazilian

corporations with on-balance sheet foreign currency exposure for hedging purposes or
to domestic financial institutions providing domestic hedging for these exposed
Brazilian corporations.
 Losses on cross-border OTC derivatives are not deductible from the Brazilian corporate
tax base.
Foreign investment into Brazil

 According to CMN Resolution 4.373/14, as amended from time to time, foreign investors
can access Brazil’s securities and derivatives markets through a portfolio investment
account. However, the foreign investor must have custodian, legal and tax representatives
in Brazil. In addition, a foreign investor interested in trading derivatives through the B3 must
open a brokerage account at a Brazilian brokerage house.
CMN Resolution 4.373/14, regulated by BCB Circular 3.752/15, replaced the former CMN
Resolution 2.689/00. These regulations aim to consolidate and simplify the current rules
related to foreign investments in Brazil.
 Eligible securities and derivatives include:
 Fixed income debt securities: bonds, debentures, CDs
 Publicly traded equity shares
 Investment fund shares
 Derivatives (exchange and organised OTC): futures, swaps, options

 Foreign capital in Brazil is governed by Law 4.131, CMN Resolution 3.844/10, as amended from
time to time, BCB Circular 3.689/13, as amended from time to time, CMN Resolution 4.373/14,
as amended from time to time, and BCB Circular 3.752/15, as amended from time to time. All
incoming investments must be registered electronically with the BCB through the Registro
Declaratorio Eletrônico (RDE) mode of the Central Bank Information System (SISBACEN).
Repatriation
With the proper documentation, repatriation of registered invested capital and remittance of
profits do not require prior approval from the BCB. Profits can be freely remitted as dividends or
as interest on capital to foreign shareholders or portfolio investors.
151
January 2023
Chilean peso (CLP)
 The CLP is a free-floating currency, although the central bank – the

Banco Central de Chile (BCCh) – intervenes occasionally
 FX regulations have been relaxed since 2018, allowing more
international FX operations conducted in CLP, though offshore the
CLP still trades mainly on a non-deliverable basis
 The BCCh intervenes when it believes the CLP’s real effective
exchange rate (REER) is fundamentally misaligned, or when the
market price transfer mechanism is under stress

Onshore average daily  Spot FX and FX forwards
USD1.0-1.5bn
spot volume:
Onshore spot  Non-deliverable forwards out to five years
USD3-5m
transaction:
15-30 pips  FX options
Onshore bid/ask spot
(0.15-
spread:
0.30CLP)  Cross-currency swaps, interest rate swaps and money market products
USD2bn
forward volume:
USD10-20m
transaction: Spot transactions can only be done onshore. The onshore spot market is Latin America’s third
15-30 pips
Onshore forward most liquid with an average daily turnover volume of USD1.0-1.5bn.
(0.15-
spread:
0.30CLP)
Offshore average daily Forwards/FX swaps/money market products
USD0.5-1.0bn
NDF volume:
Offshore average NDF In the offshore market, the CLP can only be traded via non-deliverable forwards (NDFs). A
USD5m
transaction: conventional onshore forwards market exists for residents only.
1M: 30 pips
(0.30CLP) A range of products is available such as CDs, time deposits, repos, CLP and UF41 interest rate
Offshore average NDF
12M: 30-50
spreads: swaps, and forward rate agreements (FRAs) against the Camara42 floating index, USD-CLP and
pips (0.30-
0.50CLP) USD-UF cross-currency and basis swaps, Chilean Inflation Index Forwards (over UF index) and
Average daily options bond forwards (FRAs over BCUs and BCPs43), as well as central bank and local government
USD100m
volumes:
Average options bonds in CLP and UF. Cross-currency swaps are available offshore on a non-deliverable basis.
USD20m
transaction size:
Implied option volatility Options
3M: 0.7 vol
spread:
Deliverable options are available onshore, as well as non-deliverable options offshore.
developments
Source: HSBC
41
Unidad de Formento (UF), an inflation-linked unit of account.
42
Camara is the average of interbank peso interest rates (Act/360).
43
BCU are BCCh bonds denominated in UF. BCP are BCCh bonds denominated in CLP.
152
January 2023
Notes: Santiago local time = GMT - 3 hours. Some onshore prices can be available until 6pm
Source: HSBC

FX framework
2 Jan Puente Turistico Exchange rate mechanism
7 Apr Good Friday  The CLP is a free-floating, non-deliverable currency.
1 May Labour Day
 The exchange rate is determined in the interbank foreign exchange market through OTC,
21 May Battle of Iquique
Datatec, Bloomberg (RFQ) and also through phone trades.
26 Jun St. Peter and Paul Day
16 Jul Virgen del Carmen  The BCCh occasionally intervenes in the market to limit excessive overvaluation or
15 Aug Assumption Day undervaluation of the CLP. The BCCh generally focuses on the currency’s real effective
18 Sep Independence Day exchange rate (REER) when considering the CLP’s valuation. The BCCh intervened in
19 Sep Armed Forces Day
2008 and 2011 to prevent the CLP’s overvaluation and also to build FX reserves. In
9 Oct Day of the Race
January 2021, the BCCh announced an intention to buy USD12bn worth of FX reserves
27 Oct National Evangelical Day
over the subsequent 13 months via daily purchases of USD40m to boost FX reserves by
8 Dec Immaculate Conception circa 30%. This programme was suspended in October 2021, given the “evolution of
25 Dec Christmas Day financial markets and the level of international reserves already reached.” In July 2022, the
Source: Bloomberg BCCh announced a USD20bn USD selling intervention programme (USD10bn spot and
Additional Information USD10bn NDFs), of which it executed approximately USD6bn in spot and USD9.2bn in
Ministry of Finance NDFs and then halted. At the end of 2022 the BCCh had an approximate USD9bn NDF
www.minhda.cl position that it was rolling.
Chile Banks Association
www.abif.cl Fixing mechanism
Central Bank of Chile  The fixing rate (observado) is an average of all spot transactions in the formal market between
www.bcentral.cl
Bloomberg Fixing Page 1600 local time of the previous day and 1600 local time of the current day local time, one day
PCRCDOOB <index> prior to the value date of the contract. This rate is published daily by the BCCh.
Reuters Fixing Page
CLPOB=  The observado rate is used for NDF fixings, as well as for tax and accounting purposes.
Background
 Restrictions on capital mobility have gradually been lifted in Chile over the past two decades.
The CLP is now fully convertible, but it is not deliverable offshore.
 During the 1990s, the CLP was regulated using a floating band regime. To reduce speculative
inflows and the impact on FX and monetary policies, the BCCh used FX restrictions in the
form of unremunerated reserve requirements (URR, or encaje) on foreign loans.
 In 1998, a sudden halt of capital inflows led the BCCh to rethink its currency and capital control
policies. It reduced the URR to 10% and later to 0% and widened the band on a daily basis.
 The gradual loosening of restrictions extended into 1999. A requirement to procure the
BCCh’s approval to sell USD sourced from foreign loans was scrapped. This increased the
flexibility for local banks to invest abroad.
 In 2000, banks were allowed to trade interest rate derivatives. Requirements to issue bonds
in the offshore market were also relaxed.
 In April 2001, the BCCh removed almost all remaining exchange controls.
 Since 2006, local banks have been allowed to trade FX and interest rate options.
153
January 2023
Regulations
 Foreign exchange regulations are outlined in the central bank’s Compendium of Foreign
Exchange Regulations; Chapter 14 details regulations applicable to loans, deposits,
investments and capital contributions from abroad.
 There are two foreign exchange markets in Chile, the ‘formal’ or interbank market and the
‘informal’ market. Transactions, such as settlements of derivatives with non-resident
counterparties, remittances of interest or capital of external loans, capital flows, trade finance
transactions and profit repatriation, are required to be done through an entity forming part of
the formal market, such as an authorised bank. Other transactions can be freely conducted
in the informal market, though, according to the BCCH’s Division of Statistics, over 90% of
total FX derivative transactions in Chile go through the formal market.
 On 1 January 2016, a new Foreign Investment Statute Law (Law 20.848) came into force,
with the prior Decree Law 600 (DL600) being repealed. However, foreign investors with
existing foreign investment contracts continue to be subject to the legal provisions of
DL600. Until 1 January 2020, foreign investors had the option to invest in Chile under
DL600 or under Law 20.848.
 Chile’s constitution mandates that no arbitrary discrimination shall occur in economic
matters. Law 20.848 (and DL600, which preceded it) reinforces this, stating that foreign
investors under its regulations shall receive the same treatment as resident investors.
 To invest in Chile under DL600, authorisation from the Agency of Promotion of Foreign
Investment was required. Under Law 20.848, authorisation will no longer be required, but a
certification should be obtained from the Agency of Promotion of Foreign Investment.
 There are some restrictions on foreign ownership of certain industries, most notably in the
media sector.
 Chile does offer some incentives to investors, most of which are related to job creation in
undeveloped areas.
 There are no restrictions on residents borrowing internationally.
 Decree No. 72 (Strategy for the Promotion and Promotion of Foreign Direct Investment
(FDI)) was approved on 16 March 2022. The decree seeks to enhance and promote FDI
and its potential impact on the Chilean economy. The decree presents a framework of
action that InvestChile (the government agency responsible for promoting Chile as a
destination for FDI) will implement, and that will be measured and evaluated by the
Committee of Ministers for the Development and Promotion of Foreign Investment.
Repatriation
 There are no restrictions on the repatriation of capital and profits may be remitted internationally.
Modernising CLP regulations

The BCCh has continued the process of relaxing foreign exchange regulations. Since 2018,
Chile’s central bank has been taking progressive steps towards internationalising the CLP – that
is, facilitating the currency’s convertibility in international markets by modernising and
simplifying FX regulations. Generally, this process has entailed public consultations on changes
to the Compendium of Foreign Exchange Regulations (CFER), and the second stage of this
process was carried out in 2H20 with the regulations taking effect on 1 January 2021.
The BCCh’s Financial Stability Report published in November 2020 indicated that the revised
regulations involve allowing greater participation of foreign investors in the local exchange
market (previously, foreigners were not allowed to invest in Chile directly with CLP) and
154
January 2023
expanding the authorised list of international FX operations that can be conducted in CLP. In its
November 2021 Financial Stability Report, the BCCh noted that it “has recently carried out
several initiatives to promote the cross-border use of the Chilean peso and the development of
infrastructures to mitigate the risks associated with these transactions. In the medium term, this
may produce significant changes in the functioning of the foreign exchange market.”
For more information, please consult your legal advisor regarding these regulatory changes.
155
January 2023
Colombian peso (COP)
 The Banco de la República (BanRep) operates a managed floating

currency regime
 In the offshore market, the COP trades on a non-deliverable basis
 The BanRep can intervene to accumulate reserves or control
volatility and, on occasion, uses various mechanisms to do so

Onshore average daily  Spot FX and FX forwards
USD1bn
spot volume:
Onshore spot  Non-deliverable forwards (NDFs) out to three years
USD5m
transaction:
Onshore bid/ask  FX options
2 pips (2COP)
spread:
Onshore average daily  Local government bonds
USD500-800m
forward volume:
Onshore forward  Cross-currency swaps, interest rate swaps and money market products
USD5m
transaction:
3 pips (3COP)
spread:
Offshore average daily There is a liquid spot market onshore. Spot settles on a T+0 basis. Trading hours are from 0800
USD400-600m
NDF volume: local time to 1300 local time, and the market is quoted mainly through an electronic system
NDF transaction: USD5m called Set FX. Average daily volume is around USD1bn.
1M: 3 pips
NDF spreads:
(3COP) Forwards/FX swaps
Average daily options
USD50m There is good liquidity in the FX onshore forwards market out to 18 months with the best
volumes:
Average options liquidity in tenors up to three months. Forward rates are available for delivery or cash settlement
USD10m
transaction size:
onshore. NDFs are traded both onshore and offshore.
3M: 1.25vol
spread:
Options
Note: Spreads and volumes are subject to change
with market developments Non-deliverable options on the COP are available in the offshore market, and deliverable
Source: HSBC
options are available in the onshore market.
Swaps and bonds

Colombia’s swaps market is developing and offers good liquidity. The currency swaps market
and local sovereign debt markets are active. Interest rate swaps and cross-currency swaps are
also available. IBR (Interes Bancario de Referencia) swaps have acquired relevance in the local
and offshore markets.
FX framework

 Monetary policy in Colombia targets inflation. It is implemented within a managed exchange
rate regime that can be governed by intervention rules to maintain an adequate level of
international reserves, to limit excessive FX volatility and to moderate excessive
appreciation or depreciation of the nominal exchange rate.
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January 2023
Note: Times given are Bogota local time = GMT - 5 hours
Source: HSBC
 The BanRep’s mechanisms for intervention include discretionary direct spot purchases and
sales of USD. In addition, 30-day American-style currency options can be auctioned, if spot
9 Jan Epiphany Day deviates by more than a certain amount from the 20-day moving average (MA). Various
20 Mar St. Joseph’s Day thresholds have been used, ranging from a 2% deviation to a 7% deviation from the 20-day
6 Apr Holy Thursday MA. USD put options are auctioned, if the COP strengthens (USD-COP falling); USD calls are
7 Apr Good Friday auctioned, if the COP weakens (USD-COP rising).
1 May Labour Day  The BanRep sold USD put options between July 2006 and May 2008, while the COP was
22 May Ascension Day
broadly strengthening during that time. Then, on 2 November 2015, the BanRep announced
that USD500m of one-month call options would be auctioned when the exchange rate was
19 Jun Sacred Heart of Jesus
7% weaker than the 20-day moving average to “moderate unjustified movements in the
3 Jul St. Peter and Paul
exchange rate, which may de-anchor inflation expectations”. This trigger was tightened to
7 Aug Battle of Boyaca 5% or more beyond the 20-day moving average on 23 December 2015. It was tightened
21 Aug Assumption Day again on 19 February 2016 to 3% or more but scrapped in May 2016, though the BanRep
(observed) reserved the right to intervene on a discretionary basis. Options could be exercised, if the
16 Oct Race Day (observed) currency remained weaker than the 20-day moving average at expiry.
13 Nov Ind. Of Cartagena  Put options can also be auctioned to increase FX reserves and, on 28 September 2018, the
8 Dec Immaculate Conception BanRep announced plans to accumulate FX reserves starting on 1 October 2018 via auctioning
25 Dec Christmas Day (selling) USD put options to banks and financial institutions. This was a rule-based mechanism
Source: Bloomberg whereby the options strike prices are set using the average of the 20-day USD-COP moving
Additional Information average, which theoretically means that contracts may be exercised when the COP rallies
Banco de la República de Colombia stronger than that level (based on the TRM, the market’s daily fixing level). In other words, the
www.banrep.gov.co BanRep buys USD only on days when the COP is rallying. USD purchases are sterilised via
Colombian Trade Bureau repos or TES bonds. These auctions were halted on 31 May 2019 and, on 31 October 2019, the
www.coltrade.org
Reuters Fixing Page central bank announced its reserve accumulation programme was completed.
CO/COL03
 In 2013 and 2014, the central bank was buying USD. The amount of USD purchases was
Finance Superintendence
www.superfinanciera.gov.co gradually reduced as the COP weakened versus the USD and, at the start of 2015, USD
Colombian Stock Exchange purchases were halted altogether.
www.bvc.com.co
Ministry of Finance  In October 2011, Colombia’s Finance Ministry introduced new limits on FX transactions for
www.minhacienda.gov.co
mandatory pension funds, barring them from trading more than 2.5% of assets under
management (AUM) within a five-day period. The rule applies to FX spot and derivative
transactions. Its purpose is to limit speculative FX trading by these pension funds.
Fixing mechanism
 The fixing rate (Tasa Representativa de Mercado, TRM) is a weighted average of
(0800-1300 local time) spot trades for settlement T+0. This rate is reported by
Superintendencia Financiera through www.superfinanciera.gov.co.
 The Reuters page for the NDF fixing rate is CO/COL03.
Background
 Foreign exchange operations are primarily regulated by Law 9 of 1991, BanRep Resolution 8 of
2018, which replaced Resolution 8 of 2000 and its amendments, BanRep General Ruling DCIN
83 and DODM-144 of 2018, which are applicable to derivatives and which replaced DCIN 83 of
2011 and DODM-144 of 31 October 2016 and 24 February 2017, respectively, in their entirety;
the BanRep is informed of all incoming and outgoing capital flows.
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January 2023

 It is required that all residents (Colombian or foreign) submit certain information when
making a foreign exchange transaction.
 The details of the exchange rate transaction, as well as information on the type of
transaction being closed can be included on the letter with the details of the trade and sent
to the Colombian foreign exchange intermediaries (IMCs). New regulation requires an
Exchange Rate Form only in certain cases.
 The new Exchange Rate Regime’s regulation classifies IMCs from 1-5 and establishes the
type of transactions that can be channelled through each type of IMC. The following list of
transactions should be channelled through IMCs:
 Import- and export-related transactions
 Foreign currency loans obtained by Colombian residents abroad with foreign financial
entities registered/coded at the BanRep or with IMCs, including related financial costs,
as well as those granted by them and disbursed abroad
 Foreign capital investments in Colombia and returns associated with these investments
 Foreign investments in the Colombian securities market and returns associated with
these investments
 Colombian capital investments abroad and returns associated with these investments
 Colombian investments in foreign securities and assets, as well as the returns on these
investments, except when made in currencies that are not to be traded through IMCs
 Foreign currency guarantees
 Derivatives operations
Foreign currency loans

 Payments on external loans (made to overseas banks or banks without a local domicile)
are subject to a 15% withholding tax (WHT). Interest payments made to a foreign entity on
loans for the development of infrastructure programmes are subject to a reduced 5% tax
under certain conditions; Colombia has bilateral tax agreements with several countries with
different WHT rates, including 0%, 5%, 10%, or 15%, depending on the country. Exports
can be financed through anticipated buyer’s payments or financial debt in foreign currency
with market intermediaries or foreign financial entities registered/coded with the BanRep.
 External financing can also be made through securities placements in foreign capital markets.
 Foreign lenders in foreign currency loans, as well as the guarantor in all foreign currency
guarantees need to be registered/coded with the BanRep for Colombian residents to enter
into the mentioned transactions.
 Non-residents can provide foreign currency loans, as well as local currency loans; this is a
recent change in regulations. In these cases, the resident must possess a code for the non-
resident at the central bank.
 Currency transfers between foreign companies and their branch offices in Colombia can
only be made for assigned or supplementary capital transfers, profit reimbursements, and
reimbursable trade operations as stipulated by customs and tax laws.
 Colombian residents and IMCs can transact FX derivatives operations over interest rates, FX
rates and stock indices with other IMCs or with foreign derivative operators that comply with
certain requirements. IMCs can also do so with non-Colombian residents that have foreign
investment registered at the BanRep or securities issuance in the Colombian market. Authorised
operations include forwards, swaps, options, caps, floors and collars and commodities.
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January 2023
 Colombian residents can hold foreign currency deposit accounts abroad.

 Foreign exchange related to those transactions that must be channelled through the foreign
exchange market must be held in deposit accounts abroad and registered at the BanRep
under the name of Compensation Current Accounts. Such accounts are subject to periodic
reporting to the BanRep.
 IMCs face three different types of regulatory positions: (1) total position (total open currency
position), (2) cash position (total position of the in-balance transactions), and (3) gross
leverage position (nominal amount of FX derivatives transactions).
Foreign direct investment (FDI)

 Foreign exchange that is used for foreign direct investment may enter the country without
registration with the central bank; investments in Colombia can be made as capital
investments or portfolio investments.
 Foreign exchange intended to fund foreign capital investment in Colombia must be
funnelled through IMCs or through Compensation Current Accounts.
 For a transaction to qualify as foreign capital investment in Colombia:
 The investor must meet the condition of not being a resident by the investment date
 The investment must be of a type authorised by law, and the resources must be
submitted to the proper control and supervisory agencies upon request
 Foreign investment in Colombia’s securities market (portfolio investment) covers convertible

bonds and other securities registered in the National Securities Record (RNVE)
Foreign portfolio investments

 Foreign portfolio investments, which are those made in Colombia’s securities market, cover
convertible bonds and other securities registered in the RNVE. A foreign portfolio investor must
have a local legal representative. The legal representative should be the local administrator and
can only be a broker dealer, trust company or investment administrator company under the
surveillance of the Superintendent of Finance (SFC).
 Foreign portfolio investment gains are subject to withholding tax, depending on the domicile
of the investor and the type of instrument. For example, foreign investors whose portfolios
are domiciled in ‘tax havens’ are subject to a 25% withholding tax, as well as a 25% tax on
stock dividends (see the tax authority’s (DIAN) website for a full list of countries considered
to be ‘tax havens’). For offshore investors not resident in a ‘tax haven’, a withholding tax of
14% is applied on capital gains. However, an exception is made for those investing in fixed
income securities or derivatives on underlying fixed income securities, where a 5% tax
applies on foreigners’ bond income. Also, for equities, foreign investors in non-‘tax haven’
countries are subject to a 7.5% tax on dividends.44
44
Note, these tax rates are based on the financing law that was re-submitted and approved by Congress in December 2019
after procedural objections to the original text from December 2018 were made by the Constitutional Court.
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January 2023
Other regulations
 The Superintendent of Companies and Colombia’s DIAN are the governmental entities that
may impose fines and penalties that may go up to 200% of the operation for non-
compliance with the FX regime. For this purpose, the BanRep will inform the authorities of
any breach. The SFC can also impose fines and penalties on entities under its surveillance,
if, in addition, the breach of the FX regime is caused by neglect of other applicable duties.
 Closeout netting dispositions apply, if the FX spot or derivative transaction has been
registered in the corresponding Colombian registration system according to the conditions
stated by local regulations. Timing limits on the registration of transactions for closeout
netting purposes have been adjusted, so now they can be registered for netting purposes
during the life of the transaction. For further reference on netting, please review Article 6 of
Resolución Externa No. 2 of 2017 from Colombia’s central bank.
 Local regulations detail the mandatory conditions that a local derivative master agreement
to be used by entities subject to the surveillance of the SFC must contain. The Colombian
Banking Association compiled a local master derivative agreement that follows said
requirements. This is used by the local market and replicates the ISDA agreement structure
and operation. The Funds Association has also designed a local master derivatives
agreement schedule to be used by trust funds and pension fund administrators, which is
customary in the local market.
Note: In late 2021, the BanRep activated a link on its website for the registration and notification
of amendments of international investments, both local residents investing overseas, as well as
international investors investing in Colombian assets. This reporting would have been done
previously via an exchange rate intermediary or bank.
Any changes to the exchange rate regime in Colombia are registered on Resolución Externa 1
and DCIN 83 modifications. Due to increases in e-commerce and virtual “payment buttons” (a
tool on a company’s website that allows customers to make payments for goods or services,
known as “pasarela de pagos”), a new regulation (Bulletin No. 6045) was issued by the BanRep
on 13 December 2021, detailing the new reporting requirements for such payments.
45
https://www.banrep.gov.co/sites/default/files/reglamentacion/archivos/bjd_60_2021.pdf
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January 2023
Mexican peso (MXN)
 The Foreign Exchange Commission, made up of the Ministry of

Finance and Banxico (central bank) officials, upholds a freely floating
FX regime
 The MXN is the only Latin American currency offering a fully
deliverable spot and forwards market offshore
 The MXN is one of the more liquid EM currencies
Average daily spot  Spot FX

USD5-8bn
volume:
Spot transaction: USD5-10m  MXN futures
50-100 pips
Bid/ask spread: (0.005-  FX forwards out to five years
0.010MXN)
 Currency options out to five years
Average daily
USD8bn
forward volume:  Cross-currency swaps out to 20 years
Forward
1M: USD50m
transaction:  Money market products
1M: 10 pips
(0.0010 MXN) Spot
Forward spread:
12M: 80 pips
(0.0080MXN) Daily volume is estimated to be around USD5-8bn46. Significant flows are also transacted in the
Average daily FX swaps and forwards markets. The normal spot transaction size is USD5-10m.
USD1.5bn
options volumes:
Average options Forwards/FX swaps
USD50m
transaction size:
The liquidity of hedging instruments has increased steadily over the past few years as Mexico’s
Implied option
3M: 0.4 vol trade relationships with the international community have grown. There is a wide array of
volatility spread:
Note: Spreads are subject to change with market exchange-traded and OTC MXN derivatives available. Mexico is also the only Latin American
developments
Source: HSBC country that operates a deliverable forwards market open to non-resident investors. Liquidity in
the forwards market is generally good.
The most common Mexican swaps are plain vanilla interest rate swaps that exchange a fixed rate
for a 28-day floating rate, normally based on the Interbank Interest Rate Average (Tasa de Interés
Interbancaria de Equilibrio, TIIE). The TIIE is calculated daily by the Central Bank of Mexico
(Banxico) using quotes submitted by at least six credit institutions. Volumes have decreased from
pre-2008 levels. Previously, liquidity could be found up to 20 years; however, currently, there is
liquidity only in the 2-, 5- and 10-year tenors. Currency swaps were also liquid up to 20 years
before the Global Financial Crisis (GFC), but liquidity is now concentrated in shorter tenors.
46 HSBC estimates. The triennial BIS FX surveys in recent years have indicated spot volumes are much higher, but we
continue to believe these numbers are overstated. We base our daily spot volume calculation on an estimated volume via
the Reuters dealing platform (where most USD-MXN volumes are traded in the offshore market), as well as estimates of
volumes via alternative brokerages and OTC trades.
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January 2023
Note: Times given are Mexico City local time = GMT - 6 hours
Source: HSBC
Options
MXN options trade on a deliverable basis with expiration at 1230 New York local time. Option
6 Feb Constitution Day contracts can also be negotiated for expiration using the WMR rate. Similar to the spot and forwards
20 Mar Juarez Birthday markets, the options market is quite liquid with a normal transaction size of USD50m. The most liquid
6 Apr Holy Thursday maturities are two years or less.
7 Apr Good Friday
1 May Labour Day
FX framework
2 Nov All Souls Day
20 Nov Mexican Revolution
12 Dec Our Lady of Guadalupe
 Mexico’s central bank, Banxico, was granted formal independence in 1994 and, since 2001,
Source: Bloomberg monetary policy has been conducted under an inflation-targeting regime.
 The Foreign Exchange Commission (FEC), made up of officials from the Ministry of
Finance and Banxico, is responsible for foreign exchange policy in Mexico.
Banco de Mexico
www.banxico.org.mx  Since late 1994, the FEC had maintained a freely floating FX regime. However, the FEC
Ministry of Finance
www.shcp.gob.mx has implemented several measures to preserve market stability when deemed necessary,
National Statistics, Geography and as in 1998 and 2008, at the height of the GFC. At these times, the FEC announced new FX
Informatics Institute
www.inegi.gob.mx intervention tools due to the sharp decline in global liquidity and heightened uncertainty.
Banking and Securities However, by April 2010, when market liquidity normalised, all intervention tools were
Commission suspended.
www.cnbv.gob.mx
Bloomberg Fixing Page  Until July 2008, the FEC was selling excess USD revenues from the state-owned oil
MXFT Index
HSBC Pricing Pages, Reuters company (Pemex) on a daily basis at predetermined amounts that were announced every
HSMX01, HSMX02 three months. This mechanism was designed to reduce the rate of FX reserve
HSBC Pricing Pages, Bloomberg
accumulation. The mechanism was suspended to offset a reserve decline of USD8bn
HSMX1, HSMX2
HSBC Dealing Reuters Code associated with a sale of FX to the Finance Ministry (Hacienda).
HSMX
 The authorities introduced a monthly auction of USD put options in February 2010,
specifically designed to accumulate reserves and improve Mexico’s credit profile. However,
this was suspended in late November 2011 in the wake of the MXN’s significant
depreciation against the USD.
 From 30 November 2011 until 9 April 2013, the FEC would auction USD400m per day
when the MXN had weakened by more than 2% from the previous day’s fixing. In other
words, the auction would result in placement of USD to the market only when the MXN had
weakened by 2% or more from the previous day’s central bank fix. This was designed to
reduced volatility in USD-MXN during periods of heightened market stress.
 Starting on 9 December 2014, a similar mechanism was reintroduced, whereby the FEC
would sell USD200m at auction, if the MXN weakened by 1.5% compared to the prior day’s
fixing rate. Should an auction take place, then the following day’s auction level would be set
at 1.5% from the average auction rate, not from the end of the prior day’s fixing rate.
The central bank also began selling USD52m per day, regardless of the MXN’s rate.
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January 2023
 This policy was amended in July 2015 to bring the trigger for the conditional sale of
USD200m to just a 1.0% weakening of the MXN. At the same time, the automatic USD sale
amount was increased from USD52m to USD200m. These combined policies of selling
USD200-400m each day were extended until the end of September 2015 and then, in
September, were further extended until the end of November 2015.
 On 19 November 2015, Mexico’s FEC amended the intervention policy for the period until
29 January 2016 (then later extended until 31 March 2016). During this period, the
automatic sale of USD200m was suspended, but the FEC remained committed to the
conditional sale of USD200m should the MXN weaken by 1% on a given day. An additional
commitment was added to sell a further USD200m should the MXN fall by 1.5% on the day,
conditional on the first (1%) auction being fully subscribed.
 On 21 February 2017, the central bank announced it may periodically offer FX hedge
contracts to be net-settled in MXN (effectively non-deliverable forwards), up to a total size
of USD20bn. These instruments are auctioned when market conditions warrant (i.e. when
there is low liquidity or high volatility). The terms of the contracts do not exceed 12 months.
The advantage of this programme is that it does not affect gross international reserves. The
first auction took place on 6 March 2017, when USD1bn worth of NDF contracts were
allocated. The authorities extended the supply of contracts to USD5bn on 25 October 2017,
and then to USD5.5bn on 26 December 2017.
 Since 2017, no new NDF contracts have been auctioned.
Regulations
Currency regulations are relatively liberal, with Banxico having the key responsibility for FX
regulations.
Onshore-onshore
Spot
 Only entities registered in Mexico are permitted to trade MXN onshore.
 Local entities cannot charge fees for currency transactions when profit is earned through
foreign exchange intermediation.
 Foreign residents are allowed to open MXN accounts at local banks to make transactions.

 Regulations covering derivatives are more extensive.
 All entities require the central bank’s authorisation to transact derivatives products.
 Local entities must satisfy the 31 requirements established in Circular 4/2012 with regard to
derivatives operations.
Offshore-onshore
Spot
 Foreign institutions are allowed to participate in spot trading of the MXN, provided they
have opened an account with a local bank.

 The Mexican Law of Ancillary Credit Activities states that only authorised Mexican foreign
exchange houses and Mexican banks authorised to do so by their own regulations are
allowed to conduct FX operations, such as the purchase, sale and exchange of foreign
currency, including the transfer or delivery of funds. As such, this limits the ability of a
foreign bank to offer or enter into MXN-related derivatives with Mexican counterparties
within Mexico that involve a foreign exchange transaction.
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January 2023
 The only exception to this is when the counterparty is a Mexican bank since the foreign
bank would be considered a customer of the Mexican bank.
 Foreign entities are allowed to offer onshore financing to Mexican residents, including MXN
loans, FX-denominated loans, and derivatives. However, funding has to come from offshore
as Mexican law prohibits foreign banks from taking deposits in Mexico.
 FX forwards, FX swaps, and FX options are regulated by the ISDA (International Swaps
and Derivatives Association) and a Local Master Derivatives Agreement (based on the
ISDA’s Master Agreement).
 Foreign investors are required to sign a general contract in accordance with the ISDA
regulations – either the Local Master Agreement or the ISDA Agreement – when transacting
derivatives. Depending on the type of derivative (forwards, swaps or options), specific
contracts, which may include annexes and schedules, need to be closed in addition to the
general agreement.
Onshore-offshore
Spot
 Local entities are allowed to buy and sell foreign currency offshore.

 Local entities can hedge risks with foreign institutions offshore through forwards, swaps
or options.
 Local entities are allowed to fund offshore through debt issuance or borrowing from abroad.
Offshore-offshore
 There are no restrictions on foreign entities using MXN instruments offshore.
 The market is open to spot, forwards, swaps and options operations.
Repatriation
Exchange rate policy is determined by the Exchange Rate Commission, which consists of three
representatives from Banxico and three from the Secretariat of Finance.
 Mexico allows for the free flow of capital across its borders.
 Export proceeds may be held in MXN or foreign currency for an indefinite period of time.
 There are no restrictions on international borrowing for non-resident companies.
 There are no restrictions on non-residents borrowing locally.
 There are no restrictions on the repatriation of capital, although financial institutions are
required to submit reports pursuant to Mexico’s anti-money laundering laws.
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January 2023
Peruvian sol (PEN)
 Peru has a free-floating FX rate, although the central bank – the

Banco Central de Reserva del Peru (BCRP) – intervenes to smooth
excess volatility
 A significant portion of the economy is still dollarized but this is
gradually declining
 Deliverable and non-deliverable forwards are available in onshore
and offshore markets

Onshore average daily USD300- 
spot volume: 400m
Spot FX
Onshore spot 
USD5m Deliverable and non-deliverable forwards (NDFs) out to one year, and longer tenors on a
transaction:
Onshore bid/ask 20 pips case-by-case basis
spread: (0.0020PEN)
Onshore average daily  Peruvian sovereign bonds in USD and local currency
USD500m
forward volume:
Onshore forward  Cross-currency swaps (CCS) up to five years on a case-by-case basis
USD1m
transaction:
Onshore forward 1M: 30 pips Spot
spread: (0.0030PEN) The local FX market is open between 0900 local time and 1330 local time, but quoting starts at
USD8m 0830 local time with limited liquidity. The average spot daily traded volume is approximately
options volumes:
Offshore average daily USD300-400m in the interbank market, although the market is not particularly deep, given the
USD150m
NDF volume: limited number of participants and the high level of dollarization of the economy.
NDF average
USD3m
transaction Forwards
1M: 20 pips
NDF spreads: In Peru, the onshore market consists of deliverable forwards and NDFs. While the offshore market
(0.0020PEN)
Offshore average daily is traded mainly via NDFs, deliverable forwards are negotiable. The most liquid maturities are
USD20m
options volumes:
those with tenors of up to one year with the best liquidity found in maturities out to three months.
Average options
USD5m Forwards between one year and two years are negotiable on a case-by-case basis, depending
transaction size:
Implied option volatility on the liquidity of the market, which is usually low. Total onshore forward volume is approximately
3M: 2 vol
spread:
USD500m per day, while offshore NDF volume is approximately USD150m per day.
developments
Source: HSBC Options
Non-deliverable options are available in New York.
FX framework
The PEN operates under a managed free-floating regime, and the BCRP intervenes in the FX
market to prevent excess volatility in the PEN by buying and selling USD or short-term central
bank CDs linked to the FX rate (CDRs, CDLD). In October 2014, the BCRP introduced swaps to
intervene in the forwards market as well.
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January 2023
Note: Times given are Lima local time = GMT - 5 hours
Source: HSBC
The main objective of the intervention is to reduce FX volatility. Given the high degree of
1 Jan New Year’s Day financial dollarization of the economy, heightened FX volatility can negatively impact economic
6 Apr Holy Thursday activity through balance sheet effects. The BCRP does not specifically target any particular
7 Apr Good Friday USD-PEN level, as this would be inconsistent with its inflation-targeting regime and could
1 May Labour Day encourage the use of foreign currency assets or liabilities.
29 Jun St. Peter and Paul Day
Fixing mechanism
29 Jul Independence Day The fixing rate is calculated as the weighted average rate of transactions (excluding outliers) in
30 Aug Saint Rose of Lima Day the interbank market executed on the platform, Datatec, between 0900 local time and 1330 local
8 Oct Combat of Angamos time, and is published by the local regulator on its website at the end of each day. The calculation
1 Nov All Saints Day methodology, including the fall-back rules, is defined by the BCRP. Offshore contracts are settled
8 Dec Immaculate Conception two working days after the fixing. However, some onshore contracts still use as the fixing rate the
25 Dec Christmas Day midpoint between the bid and offer published on Reuters page PDSC at 1100 local time.
Source: Bloomberg
Banco Central de Reserva del Peru Repatriation and other regulations
www.bcrp.gob.pe
Ministry of Economy and Finance
www.mef.gob.pe
There is full convertibility with no restrictions on trading FX. Non-national investors can hold
Reuters Fixing Page PEN- and USD-denominated accounts onshore.
PDSC
Bloomberg Fixing Page  When faced with strong appreciation pressures in the past, the BCRP has introduced measures
PEN SBSP Curncy to contain capital inflows. However, the primary objective remains volatility management.
Superintendencia de Banca y
Seguros  The marginal reserve requirement on PEN deposits held by foreign institutions was cut to
www.sbs.gob.pe
9.5% from 120% (previously aimed at reducing inflows) in December 2014. This brought
the reserve requirement rate for foreign investors in line with that charged for domestic
entities. Reserve requirement rates are adjusted frequently to manage credit growth, and
reserve requirements were trimmed to 5% as of March 2017. In March 2020, the BCRP
reduced the local currency reserve requirement from 5% to 4%, and reduced the reserve
requirement on short-term USD debt with foreign institutions from 50% to 9%. Meanwhile,
to discourage USD deposits, reserve requirements on foreign currency deposits were
imposed and have stood at 35% since July 2018. The domestic currency reserve
requirement was raised from 4% to 6% in November 2022.
 The regulatory limit for FX holdings among local banks is 10% of net equity for long USD
and -10% of net equity for short USD. Also, the regulatory limit for FX derivative net
positions is the maximum between 80% of net equity and PEN1.5bn, if net long USD, and
the maximum between 80% of net equity and PEN1.5bn, if net short USD. These measures
seek to reduce volatility at times of market stress and were last amended by the Banking
Superintendent (SBS) in October 2020 (Resolution 2628-2020).
 Reserve requirements apply to sales of FX derivatives that exceed the weekly limit
(USD675m). An additional reserve requirement applies, if the stock of FX derivatives sales
exceeds 135% of the December 2014 equity level or 135% of the average stock in
December 2014 and USD1.17bn, whichever is greater. Note these measures do not affect
banks’ derivatives sales aimed at hedging their balance sheets, nor interbank operations.
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January 2023
 In an effort to reduce the volume of USD credit in the economy, financial institutions may face
additional reserve requirements on USD credits in excess of certain limits. Note, any such
measures do not affect credit for foreign trade or for the long-term financing of projects.
 Any settlement of any derivative contracted between a local bank and an offshore
counterparty with a maturity of three days or less carries a 30% tax. This tax is withheld by
the local bank and delivered to the local tax authority. This measure applies to any offshore
counterparty from a country without a double taxation treaty with Peru.
 For updates of Peru’s regulatory framework, please see the BCRP’s website, including the
latest legal Circulars47.
47
https://www.bcrp.gob.pe/en/about-the-bcrp/legal-framework/circulars.html
167
January 2023
Uruguayan peso (UYU)
 The Banco Central del Uruguay (BCU) allows the UYU to trade
freely; however, the BCU maintains the right to intervene when
necessary
 UYU forwards generally trade on a non-deliverable basis offshore,
but deliverable forwards can also be traded on a case-by-case basis
 The BCU manages short-term liquidity using repos, money market
instruments and Monetary Regulatory Bills
Normal Market Conditions The following products are available onshore and offshore:
Onshore average  Spot FX
USD40m
daily spot volume:
Onshore spot  Deliverable and non-deliverable forwards (NDFs)
USD1.0m
transaction:
Onshore bid/ask  Onshore futures and forwards
1 pip (0.01UYU)
spread:
Onshore average  Sovereign and corporate bonds (domestic and global) issued in UYU, CPI-linked and USD
daily forward USD5m
volume: Spot
Onshore forward
USD0.5m The interbank FX market trades with a UYU0.01 bid-ask spread, and the standard minimum
transaction:
Onshore forward 10-15 pips (0.10- transaction size is USD0.5m with a normal transaction size of USD1.0m. Trading hours are from
spread: 0.15UYU) 1000 local time to 1600 local time.
Offshore average
<USD10m
daily NDF volume: The BEVSA, the electronic market, concentrates almost 85% of the spot interbank, but the OTC
NDF average market still exists with limited liquidity.
USD3-5m
transaction:
1M: 15-20 pips
NDF spreads: Forwards/FX swaps
(0.15-0.20UYU)
Offshore, the UYU generally trades as a NDF, although deliverable forwards can also be traded
developments on a case-by-case basis. Locally, NDFs, forwards and futures are also traded in the formal FX
Source: HSBC
market, although market liquidity is limited. OTC deals are customised.
In November 2009, the BCU implemented the trading of UYU futures (with daily compensation)
in the formal electronic exchange (BEVSA). Maturities range from one month to two years.
Normal quotes are in tranches of USD0.5m. Forward transactions still operate OTC.
Options
No FX options are available for the UYU.
FX framework
 The FX market has operated under a flexible exchange rate regime since June 2002 with
occasional interventions by the BCU aimed at reducing market volatility and maintaining an
adequate level of international reserves. The BCU can intervene in the market via spot,
forwards/futures and also buying USD in settlement of the daily auctions of Treasury
securities or selling USD on the securities’ maturity date. The intervention is normally
168
January 2023
Note: Times given are Montevideo local time = GMT - 3 hours
Source: HSBC
2023 Holiday Calendar directional (one-way) with the purpose of smoothing the pace of depreciation or
1 Jan New Year’s Day appreciation of the UYU. The BCU does not aim to set a specific value for the currency by
6 Jan Epiphany buying and selling USD within a short time frame.
20 Feb Carnival
 The BCU manages intra-day UYU liquidity through daily auctions of Monetary Regulatory
21 Feb Carnival
6 Apr Holy Thursday Bills (MRBs), repo facilities and short-term CDs.
7 Apr Good Friday  There are no restrictions for quoting USD-UYU, either onshore or offshore.
Landing of the 33 Patriots
17 Apr
Day (observed)  Normally, spot UYU settles T+0 onshore and T+2 offshore.
1 May Labour Day
Battle of Las Piedras  According to the official statute, the BCU’s main objectives are price stability and financial
22 May
(observed) system regulation. It is, thereby, responsible for monetary policy.
19 Jun Birth of Jose Artigas
18 Jul Constitution Day  The BCU targets inflation. In September 2020, the monetary aggregates model was
25 Aug Independence Day changed to the reference interest rate, holding monetary policy meetings every 40 days.
Columbus Day
16 Oct
(observed)
2 Nov All Saint’s Day
31 Dec New Year’s Eve Repatriation and other regulations
Source: Bloomberg
 There are no restrictions for residents or non-residents with regards to buying or selling
Banco Central del Uruguay foreign exchange.
www.bcu.gub.uy
Ministry of Economics and Finance  There are no bid-ask spread limits for quotes to customers.
www.mef.gub.uy
 The UYU rate is set daily by the BCU at the close of business as a weighted average of
daily trades in the electronic exchange market (BEVSA).
 There are no currency controls and legal restrictions on capital inflows/outflows.
 There are no restrictions on the repatriation of capital and earnings. However, there is strict
bank secrecy regulation: banks are not allowed to give information on depositors, except by
court order or express and written customer consent. To maintain OECD-compliant status,
Uruguay is signing several agreements on information sharing.
 Visitors and residents are required to complete a customs form on entry to the country detailing
incoming cash and other monetary instruments over USD10,000 (or equivalent) in value.
 There are no limits for wire transfers in foreign currency.
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January 2023
Notes
170
January 2023
Notes
171
January 2023
Notes
172
January 2023
Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)
whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering
analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or
issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other
views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect
their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific
recommendation(s) or views contained in this research report: Paul Mackel, Joey Chew, Jingyang Chen, Lenny Jin, Dominic
Bunning, Murat Toprak, Charlotte Ong, Daragh Maher, Joseph Incalcaterra, CFA, Clyde Wardle and Simon Williams
Important disclosures
Foreign exchange: Basis for financial analysis
This document has been prepared and is being distributed by the Research Department of HSBC and is intended solely for the
clients of HSBC and is not for publication to other persons, whether through the press or by other means.
This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to
buy the securities or other investment products mentioned in it and/or to participate in any trading strategy. Advice in this document
is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives,
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HSBC believes that investors utilise various disciplines and investment horizons when making investment decisions, which
depend largely on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations.
HSBC’s currency trade ideas on deliverable FX forwards (DF) or non-deliverable FX forwards (NDF) are usually identified on a
time horizon of up to three months, although HSBC reserves the right to extend this time horizon on a discretionary, trade-by-
trade basis.
HSBC believes an investor's decision to buy or sell an instrument should depend on individual circumstances such as the investor's
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not be used or relied on in isolation as investment advice.
Definitions for currency trades on DFs and NDFs

Buy: refers to buying the first currency in the named pair in exchange for the second currency in the named pair.
Sell: refers to selling the first currency in the named pair in exchange for the second currency in the named pair.
173
January 2023
The tenor of the instrument will be denoted and will refer to a settlement date relative to the opening date of the trade idea e.g.
1m refers to a settlement date 1 month forward from the open date of the trade idea. NDF trades normally fix two working days
prior to the settlement date.
Distribution of currency trades

The nature of foreign exchange forward trade ideas is such that there will always be an equal number of buy and sell trades
(buying one currency in exchange for selling another), both outstanding and historically.
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Additional disclosures
1 This report is dated as at 20 January 2023.
2 All market data included in this report are dated as at close 18 January 2023, unless a different date and/or a specific time
of day is indicated in the report.
3 HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its
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and/or (iii) measuring the performance of a financial instrument or of an investment fund.
174
January 2023
Production & distribution disclosures

1. This report was produced and signed off by the author on 19 Jan 2023 07:01 GMT.
2. In order to see when this report was first disseminated please see the disclosure page available at
https://www.research.hsbc.com/R/34/qtbZDqn
175
January 2023
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[1206485]
176
Global FX Research Team
Asia Precious Metals
Global Head of FX Research James Steel +1 212 525 3117
Paul Mackel +852 2996 6565 james.steel@us.hsbc.com
paulmackel@hsbc.com.hk
Head of Asia FX Research

Joey Chew +852 2996 6568
joey.s.chew@hsbc.com.hk
Jingyang Chen +852 2996 6558

Jingyang.chen@hsbc.com.hk
Lenny Jin +852 2996 6549

lenny.jin@hsbc.com.hk
Europe/CEEMEA
Murat Toprak +44 20 7991 5415
murat.toprak@hsbcib.com
Dominic Bunning +44 20 7992 2113

dominic.bunning@hsbcib.com
Charlotte Ong +44 20 7992 5543

charlotte.ong@hsbc.com
Americas
Daragh Maher +1 212 525 4114
daragh.maher@us.hsbc.com
Clyde Wardle +1 212 525 3345

clyde.wardle@us.hsbc.com
Joseph Incalcaterra +1 212 525 5606

joseph.f.incalcaterra@us.hsbc.com
Issuer of report:
The Hongkong and Shanghai Banking Corporation Limited
Level 19, 1 Queen’s Road Central
Hong Kong SAR
Telephone: +852 2843 9111
Fax: +852 2596 0200
Global FX Research
Paul Mackel Charlotte Ong
Global Head of FX Research European FX Strategist
The Hongkong and Shanghai Banking HSBC Bank plc
Corporation Limited charlotte.ong@hsbc.com
paulmackel@hsbc.com.hk +44 20 7992 5543
+852 2996 6565
Joey Chew Simon Williams

Head of Asia FX Research Chief Economist, CEEMEA
The Hongkong and Shanghai Banking HSBC Bank plc
Corporation Limited simon.williams@hsbc.com
joey.s.chew@hsbc.com.hk +44 20 7718 9563
+852 2996 6568
Jingyang Chen Daragh Maher

Asian FX Strategist Head of Research, Americas/
The Hongkong and Shanghai Banking Head of FX Strategy, US
Corporation Limited HSBC Securities (USA) Inc.
jingyang.chen@hsbc.com.hk daragh.maher@us.hsbc.com
+852 2996 6558 +1 212 525 4114
Lenny Jin Joseph Incalcaterra, CFA

Global FX Strategist Head of LatAm FX Research
The Hongkong and Shanghai Banking HSBC Securities (USA) Inc.
Corporation Limited joseph.incalcaterra@us.hsbc.com
lenny.jin@hsbc.com.hk +1 212 525 5606
+852 2996 6549
Murat Toprak Clyde Wardle

Head of CEEMEA FX Strategy Senior Emerging Markets FX Strategist
HSBC Bank plc HSBC Securities (USA) Inc.
murat.toprak@hsbcib.com clyde.wardle@us.hsbc.com
+44 20 7991 5415 +1 212 525 3345
Dominic Bunning
Head of European FX Research
HSBC Bank plc
dominic.bunning@hsbcib.com
+44 20 7992 2113
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Emerging Markets Currency Guide 2023

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Currencies

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We provide in-depth knowledge

Asia 3 Latin America 143

Europe, Middle East and Africa 97

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Chinese renminbi (CNY)

 The People’s Bank of China (PBoC), China’s central bank, maintains

1 Onshore only – must be done through a designated FX bank.

Interest Rate Options

Cross-currency swaps (CCS)

CNY interest rate swaps (IRS)

The maximum tenor of IRS is up to 10 years.

Exchange rate mechanism

 Three additional updates were subsequently announced on 31 December 2019

Forwards, FX swaps and options

 Repayment of domestic foreign currency working capital loans

 Repayment of external debt registered with the SAFE

 Income or expenses of direct investment registered with the SAFE

 Remittance of foreign currency income of an overseas-listed domestic company

 Any other transaction with the SAFE’s approval

Regulations for FX conversion and repatriation

Cross-border portfolio investments

Dividends, cross-border direct investments and financing activities

Shanghai Free Trade Zone (SFTZ)

 Current account transactions

Table 2: Comparison of different cross-border loan and cash sweeping schemes

Individuals’ FX conversion rules

 Annual quota of USD50,000 for conversion in both directions

 Any conversion/FCY remittance exceeding the above daily limit is subject to

 Any conversion from RMB into FCY is subject to supporting documents

 No daily limit for FCY remittance out of mainland China

 Daily transfer limit of RMB80,000 from Hong Kong and Taiwan

 Daily transfer limit of RMB50,000 from Macau

Offshore Chinese renminbi

 The Chinese renminbi (RMB) became deliverable offshore in Hong

= least liquidity = moderate liquidity = most liquidity

Additional Information Options

Banking and structured products

Dim Sum bonds

Opening an account in CNH

Exchange rate mechanism

Regulations on cross-border flows

Cross-border investment schemes

Chart 1: Cross-border investment liberalisation over the years

 In May, the PBoC announced a plan to

1996- 2012 2014 2019 2020 2021

Table 1: Inbound investment channels

Non-sovereign entities: Offshore CNY FX hedging and onshore FX

Investment quota Quota abolished, effective from 6 June 2020 No limits

Non-sovereign entities: registration with the PBoC via settlement agent

Table 2: Circular investment channels

Shares listed on the ChiNext Board of the SZSE

Table 2: Circular investment channels (continued)

Table 3: Outbound investment channels

Liquidity, risk management rules and market infrastructure

 Currently, participating authorised institutions in Hong Kong can obtain intra-day

Offshore RMB centres and RMB FX swap agreements

Free Trade Zone (SFTZ)

Table 4: Offshore RMB centres and RMB FX swap agreements

Bangladeshi taka (BDT)

 Bangladesh Bank (BB) operates a managed floating regime with

Normal Market Conditions Spot