BB lower interest rate against trade finance in foreign currency

The Bangladesh Bank has brought down the interest rate by 0.5 per cent to 3 per cent against the short-term trade finance in foreign currency considering the ongoing global market trends.

The central bank on Tuesday issued a notice saying that the revised all-in-cost ceiling per annum is set with a mark-up of 3.00 per cent over the benchmark rate applicable to the relevant currency against short-term permissible trade finance.

The foreign exchange policy department of Bangladesh Bank issued the circular and sent it to the Authorized Dealers (ADs) of foreign exchange in Bangladesh for immediate execution.

The notice also asked banks to continue financing arrangements with LIBOR (London Interbank Offer Rate) as the benchmark rate till its usability is ceased. 

The LIBOR (London Interbank Offer Rate) is a benchmark interest rate at which global banks lend to one another in the international interbank market for short-term loans. It acts as a benchmark for short-term interest rates. It is used for pricing interest rate swaps, currency rate swaps as well as mortgages.

Earlier the rate was 3.50 per cent over the relevant benchmark rate. 

Industry insiders said that the revision will save importers for imports under buyer’s credit in foreign currency.