The opening of letters of credit (LCs) fell year-on-year by 23 per cent in August FY24, after the government and Bangladesh restricted imports in a bid to halt the steady decline of foreign exchange reserves.
LCs worth $4.96 billion were opened in August this year, compared to $6.52 billion in the same period last FY, show latest data from the central bank. Besides, LC settlements dropped by 9.27 per cent to $5.38 billion in August, compared to $5.93 billion year-on-year.
This data indicates that the government – which tightened the LC process in the first month of FY24 – is trying to stabilise the local USD market, experts say.
Back in July last year, the central bank had asked banks to inform it 24 hours before the opening of LCs amounting to $3 million or above as part of austerity measures.
Ahsan H Mansur, economist and executive director of Policy Research Institute, said, “LC openings have fallen in the past year due to the central bank’s austerity measures, and this was a timely initiative.
“The central bank restricted the imports of luxury and non-essential products amid the volatility in the forex market, and this move was necessary. The banks are now able to settle around 80 per cent – 90 per cent import payments through their USD income.”
