BB sets cost cap for short-term forex trade finance
The Bangladesh Bank (BB) has set the overall cost cap for short-term foreign exchange trade finance.
A circular from BB said that the all-inclusive cost will include the full cost of a financial transaction, business transaction, taxes and fees such as closing costs, origination fees or commissions.
The Foreign Exchange Policy Department of BB has issued a circular in this regard and sent it on Tuesday to Authorized Foreign Exchange Dealers (ADs) in Bangladesh for immediate execution.
According to the circular, in view of global market trends, it was decided to set an annual cap on all costs with a mark-up of 3% over the reference rate applicable to the relevant currency in relation to short-term trade finance. term.
As usual, banks will continue to arrange financing with LIBOR as the reference rate until its use ceases, the notification says.
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LIBOR (London Interbank Offer Rate) is a benchmark interest rate at which global banks lend to each other in the international interbank market for short-term loans. It serves as a benchmark for short-term interest rates. It is used to value interest rate swaps, foreign exchange swaps as well as mortgages.