Dhaka, July 2 -- Bangladesh Bank (BB) has approved the introduction of Forward Rate Agreements (FRAs) in import trade to protect local importers from international interest rate fluctuations, particularly involving the Secured Overnight Financing Rate (SOFR).

The central bank issued a circular on Thursday allowing Authorised Dealer (AD) banks to sign these agreements with local buyers and borrowers tapping into supplier and buyer credits for usance imports.

A Forward Rate Agreement is a financial contract that allows parties to lock in an interest rate for a specific future period, offering an effective shield against future interest rate uncertainty. Usance imports allow businesses to defer their payments for a specified timeframe afte...