Bangladesh Bank (BB) has reduced the maximum allowable cost on short-term foreign trade finance, a move expected to lower financing expenses for importers and exporters amid shifting global interest rate dynamics.
In a circular issued on Monday, the central bank lowered the all-in-cost ceiling on short-term foreign currency trade finance from benchmark rate plus 4 per cent to benchmark rate plus 3 per cent. This reduction will apply to foreign currency financing linked to benchmark rates such as SOFR (Secured Overnight Financing Rate) and Euribor, depending on the currency involved.
With SOFR currently at around 3.60 per cent, this change reduces the maximum allowable cost of trade financing from nearly 7.60 per cent to approximately 6.60 per cent. The move is expected to make short-term trade finance more affordable, particularly for businesses that rely heavily on international financing for working capital and trade payments.
The central bank stated that the adjustment was made in line with recent changes in global interest rate trends to ensure more competitive pricing for foreign currency financing.
Industry insiders, including bankers and business leaders, expressed optimism, noting that the reduction in financing costs would provide relief to exporters and importers facing volatile global trade conditions. They believe the move will help businesses better manage international economic uncertainties and improve cash flow.
The revised ceiling also applies to discounting usance export bills and early payments for exports conducted under open account credit terms, as per previous foreign exchange guidelines.
This move is part of Bangladesh Bank’s ongoing efforts to enhance trade financing conditions and ease the cost of doing business for the country’s importers and exporters.
