Central bank cuts interest on short-term trade finance
The Bangladesh Bank has reduced the interest rate for short-term trade finance in foreign currency.
In a circular on Tuesday, the Foreign Exchange Policy Department of the central bank said the revised all-in-cost ceiling per annum is set with a mark-up of 3% over the benchmark rate applicable to the relevant currency against short-term permissible trade finance.
Earlier the rate was 3.50% over the relevant benchmark rate.
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The circular allowed banks to continue financing arrangements with London Interbank Offer Rate (Libor) as the benchmark rate till its usability ceased.
According to business insiders, the US dollar benchmark rate, Secured Overnight Financing Rate (SOFR), is on an upward trend. As such, the revision will save importers for imports under buyer's credit in foreign currency and exporters for discounting export bills before maturity.
