Exporters in Bangladesh are likely to face higher borrowing costs as the Bangladesh Bank has linked interest rates on Export Development Fund (EDF) loans to the Secured Overnight Financing Rate (SOFR), aligning with global financial standards. According to a new directive, banks can now borrow from the EDF at SOFR plus 0.5% per annum and lend to exporters at SOFR plus 1.50%. This marks a shift from the previous fixed rates, where the central bank charged 3% interest to dealer banks, who then lent at 4.50% to exporters. With SOFR currently at 5.33%, the change introduces market-based fluctuations that could significantly impact export-oriented businesses. The size of the EDF, designed to support exports, has also been reduced to $2.5 billion due to a dollar shortage, further pressuring exporters to manage their borrowing strategies carefully.
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