Letters of credit (LCs) for imports were reportedly opened more frequently in FY '24 than in FY '23, despite market dollar crises and restrictions imposed by the Bangladesh Bank.
Data from the central bank indicates that the LC opening increased somewhat from US $ 68.24 billion in FY '23 to US $ 68.69 billion in FY '24.
Compared to US $ 34.78 billion over the same period in 2022, it was US $ 32.92 billion in July through December of 2023.
With the commencement of the new fiscal year, LC opening started to increase once more, hitting US $ 4.37 billion in July and US $ 6.1 billion in August.
Bankers mostly ascribed this surge to increased imports by the government, which included capital equipment for power sector projects. The Bangladesh Bank provided dollars from its foreign exchange reserves to meet high demand for government imports.
Over the past three years, the central bank sold from its reserves almost US $ 33.91 billion, including US $ 12.8 billion in FY '24, US $ 13.5 billion in FY '23 and US $ 7.62 billion in FY '22.
Following rules from the International Monetary Fund, Bangladesh's gross foreign exchange reserves decreased from US $ 21.78 billion on 30th June to US $ 20.48 billion on 31st July. On 31st July, the net foreign exchange reserve was US $ 15.47 billion. The central bank and the government are equally concerned about the declining foreign exchange reserves.
The strain it has placed on the Taka, which has seen depreciation versus the US dollar, reaching Taka 118 in May, is among the immediate implications, according to bankers.
—Apparel Resources
