Import drops 20% in August
Import in terms of LC (Letter of Credit) settlement dropped 20% in August from the previous month thanks to various steps such as elevating the LC margin to 100% to stabilise the country's foreign exchange market.
The opening of LCs was also on a downward trend.
LC payments stood at $5.93 billion in August, a drop from $7.42 billion in the previous month, according to the latest report of the Bangladesh Bank.
According to central bank officials, the regulator is discouraging imports of all types of goods except essential items amid depleting foreign currency reserves.
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LC payments are gradually decreasing as the central bank is selling dollars for the imports of daily essentials only and imposing the highest LC margins for other products, they added.
Now the amount of LC opening has also decreased and it will decrease further in the future, they said.
Md Serajul Islam, executive director and spokesperson of the Bangladesh Bank, said they are trying to normalise the current economic crisis.
"The new governor has taken various steps which are now paying off," he added.
In August, the second month of the current fiscal year, the opening of LCs by importers stood at $5.31 billion, which is a 17% decrease from $6.22 billion in the previous month.
The central bank report also shows that LC settlements were $6.85 billion in January this year, $6.55 billion in February, $7.67 billion in March, $6.93 billion in April, $7.25 billion in May and $7.75 billion in June.
Bangladesh has fallen into a record trade deficit due to the massive increase in imports compared to the country's exports post-Covid and the skyrocketing price of all types of products including energy in the global market.
The trade deficit stood at a record $33.25 billion at the end of the outgoing 2021-22 fiscal year. At the same time, the current account deficit also surpassed $18.50 billion.
According to the Bangladesh Bank data, banks that are suffering from a shortage of dollars purchased $7.62 billion from the central bank for Tk66,650 crore in fiscal 2021-22.
In continuation of last year, banks have been facing the dollar crisis from the beginning of the current financial year starting in July.
To keep the foreign exchange market stable, the central bank has taken several steps including elevating LC margins to reduce imports of luxury as well as less necessary goods.
At the same time, the central bank continued to sell dollars to banks from its foreign exchange reserves to help the lenders settle urgent government imports.
According to the latest statistics, the central bank has sold $1.8 billion for Tk17,603 crore in the 47 days of the current fiscal year.
The central bank has made a 100% margin mandatory on imports of 27 types of goods, including luxury items. Banks have been asked to inform the Bangladesh Bank 24 hours prior to opening LCs worth above $3 million.
At the same time, banks have been barred from purchasing new vehicles.
Dollar's import LC settlement rate
On Wednesday, state-owned banks sold dollars in import LC settlements at a maximum of Tk108. But private banks have been charging a slightly lower price for dollars in LC settlements for the last few days.
A treasury department official at a private bank told TBS, "We are buying dollars at an average Tk105. So in LC settlements, we have charged up to Tk106. This rate has been going on for the last three days."
Besides, exchange houses slightly lowered the dollar rates on Wednesday. Remittance dollars were collected from the houses at a maximum of Tk110. However, there is still a dollar crisis in the market.
Although there is a shortage of dollars, the price of the dollar may decrease slightly in the next few days, said treasury department heads of at least two banks. They said that private banks have already reduced the dollar price.
The dollar rate remained unchanged at Tk112 in the open market. The greenback was sold at the same price on Tuesday as well.
