Importers opened letters of credit worth $24.26 billion from July to October, a 15.1 percent year-on-year fall, in a sign that measures taken in tandem by the government and Bangladesh Bank have started to pay off.
In October alone, the decrease in LC opening was 38.33 percent to $4.74 billion, compared with the month last year, according to central bank data.
The measures taken to ease pressure on foreign currency reserves by curbing imports, however, failed to restrain the settlement of previously opened LCs, which increased by 25 percent in the first quarter of 2022-23.
The rise in LC settlement continued to put pressure on the reserves, from which the Bangladesh Bank had to sell $5.6 billion so far in the ongoing fiscal year, said central bank spokesman Abul Kalam Azad.
Analyst Ahsan H Mansur hopes LC opening and settlement will come to the same level in two to three months with the restrictions on imports in place.
The liabilities being settled now are of LCs opened in April and May, he pointed out.
“The opening of new LCs has decreased, but we’ll get the results of this fall in December or January.”
The central bank has extended the period for settling LCs to ease the pressure, but businesses are rushing for quick settlement fearing further rise in dollar prices.
“Many of the LCs are deferred ones, which is raising the spending now,” said Selim RF Hussain, the chairman of the Association of Bankers, Bangladesh and managing director of BRAC Bank.
“This trend may continue for two to three more months.”