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Dhaka Tribune

Import LC openings in April down by 7%

Banks opened import LCs worth $5.68 billion in April, down from $6.13 billion in March, but higher than the $4.73 billion in February

Update : 28 May 2024, 08:11 PM

Opening of letters of credit (LCs) in April fell by 7%, but import bill settlements increased by 2% compared to the previous month, which insiders say were caused by the Eid-ul-Fitr holidays.

According to Bangladesh Bank data, banks opened import LCs worth $5.68 billion in April, down from $6.13 billion in March, but higher than the $4.73 billion in February.

April's figure is 20% higher compared to the same month in 2023.

Readymade and other production-related companies were closed for 10-15 days during both Eid festivals. The need for raw materials decreases as production at these establishments is halted.

Consequently, the tendency to open import LCs declines during Eid months, sources said.

However, over the last one and a half years, the central bank has implemented several measures to reduce imports, including maintaining import LC margins at 100% and discouraging the import of luxury goods.

In the first 10 months of the current fiscal year, import LCs worth $56.19 billion were opened, slightly down from $56.36 billion in the corresponding period last year.

Thus, year-on-year LC openings have not significantly decreased.

According to central bank data, banks paid $5.54 billion in import LCs in April, higher than figures for February and March.

LC settlements in April increased by 14% compared to the same period in the previous fiscal year.

Currently, banks are selling dollars at a maximum of Tk119 to settle LCs.

Fitch Ratings downgraded Bangladesh's Long-Term Foreign-Currency Issuer Default Rating to B+ from BB- on Monday, stating: "Domestic US dollar scarcity has led to effective import restrictions, as authorities manage FX allocation. Lower imports from these measures and sustained export growth drove the current account surplus to an estimated 1.4% of GDP in the fiscal year ending on 30 June 2024."

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