Trade finance in forex
Interest raised to 4.0pc over benchmark rate
FE REPORT | Friday, 2 February 2024
Bangladesh Bank (BB) has increased the all-in-cost ceiling for short-term trade finance in foreign exchange (forex) to 4.0 per cent.
The central bank in a circular issued on Thursday said the move came considering the global market trend and interest rate scenario.
For example, the previous rate was SOFR plus 3.50 per cent set in September 2022.
An all-in-cost consists of each and every cost involved in a financial transaction or business operation.
"It has been decided to set the all-in-cost ceiling per annum with a mark-up of 4.00 per cent over benchmark rate, e.g. SOFR, Euribor etc., applicable to the relevant," the circular reads.
The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans replacing the London Interbank Offered Rate (LIBOR).
Euribor, or the euro interbank offer rate, is a reference rate that is constructed from the average interest rate at which eurozone banks offer unsecured short-term lending on the inter-bank market.
[email protected]