Bangladesh begins DIBOR based trade – Central Bank
The launch this week of inter-bank transactions using the Dhaka Interbank Offered Rate (DIBOR) will help Bangladesh to develop a more competitive money market, central bank Governor Atiur Rahman said on Friday.

DIBOR, the country’s first benchmark interest rate on the financial markets, was introduced by the Bangladesh Foreign Exchange Dealers’ Association with central bank encouragement.

More than 50 banks including 12 foreign banks operate in Bangladesh’s financial market.

DIBOR is a rate at which banks will lend to each other for a specific maturity period in the Dhaka market.

He said interest rates for inter-bank money transactions would be lower with the introduction of DIBOR and more foreign direct investment would come into the country.

The interest rate will be between 4.46 percent and 6.5 percent.

He said that more opportunities will soon emerge for local financial institutions and business entities to apply DIBOR in pricing interest rate and foreign exchange-related products.

India, Sri Lanka and Pakistan have already introduced benchmark interest rates for smooth operation of their financial markets.

Source: Reuters via Yahoo! Asia News

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