The Bangladesh Bank (BB) has increased the all-in-cost ceiling for short-term trade finance in foreign exchange (forex) to 4.0%, considering global market trends and the interest rate scenario. The move, outlined in a recent circular, replaces the previous rate of SOFR plus 3.50% set in September 2022. The all-in-cost includes all costs associated with a financial transaction or business operation. The decision establishes a 4.00% per annum ceiling with a mark-up over benchmark rates like SOFR (Secured Overnight Financing Rate) or Euribor (euro interbank offered rate). SOFR is a benchmark interest rate for dollar-denominated derivatives and loans, while Euribor reflects average interest rates for eurozone banks’ short-term unsecured lending.
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