The opening and settlement of letters of credit (LCs) in the country rose in March compared to February.
According to the latest Bangladesh Bank (BB) data, banks opened import LCs worth $6.13 billion in March, which was 17 per cent higher than the previous month’s at $5.28 billion.
On the other hand, the settlement of LCs stood at $5.45 billion in March, which was 14.50 per cent higher compared to February’s amount.
Requesting anonymity, a senior BB official told The Business Post that the inflow of remittances and export proceeds recently increased and the USD market situation stabilised. That encouraged banks to open more LCs in March compared to February.
The treasury head of a private bank, asking not to be named, also told The Business Post that businessmen opened more sight LCs in March. “Three or four months ago, traders opened around 25 per cent in sight LCs as they preferred deferred LCs. But in March, the percentage of sight LCs was 50 per cent, which was more than the last few months.”
The country’s banking sector has been suffering from the USD crisis since 2022. However, the country witnessed a remittance inflow of more than $2 billion in both January and February. However, in March, the remittance inflow had dropped to $1.97 billion.
Sector people think the situation is somewhat improving as the USD inflow through legal channels has increased in the past few months while volatility in the dollar market has also decreased.
Currently, banks are offering Tk 115-116 to remitters against one US dollar, and on the other hand, they are opening LCs at Tk 117-118.
Biswajit Saha, director of corporate and regulatory affairs at City Group, told The Business Post, “We are still suffering while opening LCs as banks are claiming that they don’t have sufficient USD. Currently, we are opening LCs at Tk 118. But we have learned that the rate of import LCs will increase again.”
Currently, banks, especially the state-run ones, are taking US dollar support from BB for settling import payments of Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation and Bangladesh Chemical Industries Corporation, among other government agencies.
The central bank has sold $11.65 billion from the country's foreign exchange reserves to state-owned banks, and in specific cases, to private commercial banks in the first 10 months (July-April) of FY2023-24 to facilitate the government’s commodity and fuel imports through LCs.
