LC settlement down, opening up in Dec

Letter of credit (LC) settlement fell to $4.25 billion in December last year while LC opening rose slightly to $4.11 billion despite the government’s austerity measures.

In November, LC settlement stood at $5.6 billion and LC opening was $4.02 billion, as per the Bangladesh Bank data.

The LC opening figure was $4.74 billion in October and $6.51 billion in September. Besides, LC settlement was $6.41 billion in October and $6.72 billion in September, shows the central bank data.

Industry insiders said it is good news that LC settlement was down in December and the pressure on forex reserves will reduce if this trend continues in the upcoming months.

The country’s gross forex reserves stood at $33.83 billion on December 28, but usable reserves were $25.71 billion, as per the central bank data.

Gross forex reserves reached a record high of $48 billion in August 2021.

Pubali Bank Managing Director and Chief Executive Officer (current charge) Mohammad Ali said luxury items are still being imported despite various measures to control that.

He said the government should take strict measures to stop this.

In July last year, the Bangladesh Bank imposed a 100 per cent LC margin on the imports of luxury and nonessential items.

In the same month, the banking regulator also asked banks to inform it 24 hours before opening LCs amounting to $3 million or above as part of the austerity measures.

Mutual Trust Bank Managing Director and Chief Executive Officer Syed Mahbubur Rahman told The Business Post banks are now facing pressure due to growing import bill payments that were deferred in the previous months.

He said the impacts of austerity measures would come to light in the upcoming months.