Secured Overnight Financing Rate
SOFR, or the Secured Overnight Financing Rate, is a benchmark interest rate
for dollar-denominated loans and derivatives. It is published by the Federal
Reserve Bank of New York and is based on transactions in the overnight
repurchase agreement (repo) market.
SOFR rate is crucial for Bangladesh because Bangladesh has to repay loan
from World bank and IMF at the SORF rate. Since 2022, SOFR rate has been
gradually raising due to the different issues come including Russia Ukrain
War and several US banks collapse. In January 2022, it was 0.5%, but it is
currently 5.33%. Recently Bangladesh got loan from world bank as budget
support, where secures $400 million in Japanese yen currency. This
strategical move helps Bangladesh to relief dollar pressure.
Tokyo Overnight Average Rate
TONA, or the Tokyo Overnight Average Rate, is a key interest rate benchmark
used in Japan. It represents the average rate at which unsecured overnight
loans are transacted in the Japanese interbank market. TONA is similar to
other overnight rates like SOFR in the United States, Policy rate in the
Bangladesh, LIBOR (London Interbank Offered rate) and serves as a critical
component of Japan's financial system. Bangladesh will get significant
benefits due to lower interest rate of TONA that is currently 0.08%. This
lower rate helps Bangladesh to repay lower interest rate.
0 Comments