What changed
Previously, ACU settlements were only in ACU Dollar. Effective January 1, 2009, participants have the option to settle in ACU Euro as well. The Asian Monetary Unit is now denominated as both 'ACU Dollar' and 'ACU Euro', equivalent to one US Dollar and one Euro respectively.
What it means for you
Banks now have flexibility to choose settlement currency, reducing exchange risk and transaction costs for euro-denominated trade within the ACU. This aligns with global trade practices and may boost ACU usage. Banks must update their systems and correspondent banking arrangements to handle dual-currency settlements.
What you must do
- Open and maintain ACU Dollar and ACU Euro accounts with correspondent banks in ACU member countries.
- Ensure all eligible payments are settled through these designated accounts.
- Inform constituents about the new settlement options.
- Prepare for separate amendments to FEMA regulations and the ACU Memorandum.
Who it affects
AD Category-I banks, Importers and exporters using ACU mechanism, Correspondent banks in ACU member countries
What currencies can we now use for ACU settlements?
From January 1, 2009, you can settle in either ACU Dollar or ACU Euro. The ACU Dollar equals one US Dollar, and the ACU Euro equals one Euro.
Do we need separate accounts for each currency?
Yes, AD Category-I banks are allowed to open and maintain both ACU Dollar and ACU Euro accounts with correspondent banks in other participating countries.
Are there any regulatory changes we should expect?
Yes, amendments to FEMA (Manner of Receipt and Payment) Regulations, 2000 and the ACU Memorandum are being issued separately. Stay tuned for those updates.