**Bangladesh Secures ¥400 Million Loan from World Bank to Alleviate Dollar Pressure**
The Bangladesh Bank has secured a ¥400 million loan from the World Bank, aiming to reduce the excessive pressure on the country's dollar reserves. The decision to take the loan in Japanese yen instead of U.S. dollars is a strategic move by Bangladeshi officials to benefit from lower interest rates.
The U.S. Federal Reserve currently calculates interest rates based on the Secured Overnight Financing Rate (SOFR), which stands at 5.31%. This rate has increased significantly since January 2022, when it was 0.5%, due to economic disruptions such as the Russian-Ukrainian war and the collapse of several banks in the United States. In contrast, the Bank of Japan uses the Tokyo Overnight Average Rate (TONA) to calculate interest rates, which is currently at 0.77%.
By opting for a loan in yen, Bangladesh will incur significantly lower interest payments compared to a dollar-denominated loan. This smart financial strategy is expected to ease the burden of loan repayment and stabilize the country's economic situation.
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