Knitwear manufacturers and exporters in Bangladesh demanded the use of Bangladeshi Taka instead of US dollar for opening LCs at the local level.
The apex body of the knitwear manufacturers Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) recently made the demand in a letter to the governor of Bangladesh Bank.
The organization believes the dollar crisis will be somewhat relaxed if the central bank approves its demand.
According to industry insiders, due to the dollar crisis in the banks, the import-export trade of the country has been disrupted severely for the last few weeks.
A number of commercial banks are unable to meet their LC liabilities and the crisis has created instability in the interbank foreign exchange market.
In such a situation, BKMEA Executive President Mohammad Hatem sent a letter to the central bank governor making the demand.
“In the context of the global recession, the dollar crisis is going on all over the world and Bangladesh is not exempt to it,” the letter read.
The letter also said that the commercial banks are struggling to meet the demand for dollars to open LCs and repay their payments which hurts the export sector of the country.
“Nearly 80% of the raw materials of the knitwear sector are procured from the domestic level. It will be easier to deal with the dollar crisis if the LCs are opened in Taka instead of US dollars at the local level,” Mohammad Hatem said in the letter.
Moreover, due to the policy process of dollar conversion, they are facing a huge loss due to the difference of Tk7-8 per dollar.
“If the system of paying in Taka instead of US dollars is adopted for the purchase and payment of debt securities, the crisis can be dealt with” the letter read.
When asked about the letter, Mohammad Hatem told Dhaka Tribune that the RMG manufacturers issue back-to-back LCs to buy yarn from spinning mills within the country.
“Since there is a crisis with the US dollar at the moment, if the local LCs are opened in Taka instead of dollars at least, it will be tolerable for everyone,” he added.
They are demanding it for a short time in order to deal with this temporary problem. It can be withdrawn again when the situation normalizes, he added.
Responding to another question, he said that they haven't received any reply from the central bank, noting that they are waiting for instruction, hoping the central bank will consider it.
“Due to the dollar crisis, our raw material imports are getting disrupted and there are also other domestic crises related to power and energy, which forced us to produce under capacity,” he added.
As orders are decreasing, production costs increased, and issues like the dollar crisis, energy and power disruption and global inflation remain, has greatly affected the sector, he added.
