Interest rate for short-term trade finance in foreign currency revised up
The Bangladesh Bank has revised up the interest rate against short-term trade finance in foreign currency.
The Foreign Exchange Policy Department of the central bank issued a circular in this regard on Wednesday.
"Given the global market trends, it has been decided to set an all-in-cost ceiling per annum at SOFR [Secured Overnight Financing Rate] plus 3.50% for short term trade finance in foreign exchange," the circular reads.
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Earlier in the last month, the rate was reduced from 3.5% over the benchmark rate to 3% over the benchmark rate applicable to relevant currencies against short-term permissible trade finance, following businesspeople's request as the SOFR has been on an upward trend.
"The interest rate applies to credits to buyers and suppliers [in import-export]. We reduced the rate earlier which caused a scarcity of credits. Hence, the rate has been brought back to the previous position," a central bank official, wishing to remain unnamed, told The Business Standard.
