TBT DESK: Bangladesh Bank is set to introduce two new transaction-based money market reference rates — the Bangladesh Overnight Financing Rate (BOFR) and the Dhaka Overnight Money Market Rate (DOMMR) — aimed at bringing greater transparency, reliability and depth to the country's financial markets. The central bank's Data Management Department made the announcement at a press conference at its head office on Sunday.
The move comes as Bangladesh Bank seeks to replace the long-standing but widely criticised Dhaka Interbank Offered Rate (DIBOR), which has been published by the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) since 2010. DIBOR is calculated on the basis of data submitted voluntarily by member institutions, meaning it does not always reflect true market conditions. Many banks have routinely failed to provide data, leaving the rate an unreliable indicator of actual market activity.
To fix that structural weakness, Bangladesh Bank will draw the new rates directly from its own automated systems. BOFR will be calculated from secured interbank repo transaction data collected through the central bank's Financial Market Infrastructure platform, while DOMMR will be derived from unsecured interbank lending data gathered through the Electronic Dealing System for Interbank Money Market. Both rates will be computed using a volume-weighted mean, with appropriate statistical filters applied to exclude outlier transactions.
Initially, BOFR will be published in two tenors — overnight and one week. DOMMR will cover four tenors: overnight, one week, one month and three months. For overnight DOMMR, data from at least ten transactions on the previous working day will be required. For other DOMMR tenors, a minimum of five transactions conducted over the preceding seven working days must be recorded. For BOFR, the calculation window is three preceding working days, with a minimum of ten transactions for the overnight tenor and five for the one-week tenor.
The rates are modelled on global benchmarks such as SOFR — the Secured Overnight Financing Rate used in the United States — and are intended to serve as primary price indicators for loan contracts, bonds, floating-rate products including derivatives, and other financial instruments. Bangladesh Bank said the new framework will align the country's financial markets with international standards and provide a credible, market-reflective benchmark for pricing and risk management.
Both rates will be published each morning on the Bangladesh Bank website by the Data Management Department.
Officials said the initiative marks a significant step toward deepening and stabilising Bangladesh's money market. Separately, the central bank is also working to amend the Banking Operations and Functions Regulation (BOFR) and the Direction on Management of Money and Reserves (DOMR), with the revisions expected to be completed by 2027 to bring them in line with the Bank Companies Act and present-day banking realities.