Bangladesh Bank improves access to short-term foreign exchange loans
The Bangladesh Bank on Wednesday raised the ceiling on the rate at which Bangladeshis could obtain finance from external sources through local banks.
The move comes after benchmark rate hikes in the United States made it difficult for them to access finance.
On August 16, the central bank set the annual cap on the overall cost with a 3% mark-up to the relevant currency benchmark rate against short-term trade finance, a cut of 50 basis points compared to the rate of 3.5% previously.
Rising interest rates reduce global liquidity.
For businesses, a tighter credit environment means higher borrowing costs. According to the Asian Development Bank, the monetary tightening in the United States has led investors to withdraw their money from Asian economies.
In view of global market developments, it has been decided to set the ceiling for all annual costs at SOFR + 3.50% for short-term trade financing in foreign currencies, the central bank said in a notice. of the day.
All-in costs include the total cost of a financial transaction or business operation, including all taxes and fees such as closing costs, origination fees or commissions.
The Secured Overnight Funding Rate (SOFR) is a benchmark interest rate for derivatives and dollar-denominated loans that replaces the London Interbank Offered Rate.