BB to analyze exporters’ proposal of back-to-back local LC in taka

The Bangladesh Bank did not make any decision over the opening and settling of back-to-back letters of credit in taka at local stages in Wednesday’s meeting with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and the Bangladesh Textile Mills Association (BTMA), media reported.

Speaking to the media, Md Mezbaul Haque, executive director and spokesperson of the central bank, said that they have discussed the matter with business people and they must look into whether the facility will conflict with other Bangladesh Bank circulars [rules].

Moreover, some tax and legal analysis are also needed in this regard.

He also told the media that after all evaluations, they will again discuss the matter with traders to make a decision.

Both the BKMEA and the BTMA presented their arguments for and against local LCs in taka.

“We want to make the payments in taka so that we can continue trade even amid the scarcity of dollars. It would be beneficial for us. This will also reduce pressure on banks. It is a temporary measure. If the dollar crisis is resolved, the central bank will withdraw the decision,” BKMEA Executive President Mohammad Hatem told reporters after the meeting.

“We want to make the payments in taka so that we can continue trade even amid the scarcity of dollars. It would be beneficial for us. This will also reduce pressure on banks,” he added.

BTMA Director Razeeb Haider, however, said for the yarn sold through local LCs, cotton is sourced from other countries. “If local LCs are opened in taka, we will have to collect dollars separately from banks to import cotton.

“Moreover, we need dollars to repay loans taken under the Export Development Fund. We will face a dollar crisis if they [apparel makers] open or settle LCs in taka. We will also incur a lot while buying dollars for our import settlement.”

Bangladesh Bank Deputy Governor Ahmed Jamal, Executive Director Muhammad Zakir Hasan, Foreign Exchange Policy Department Director Md Sarwar Hossain and other senior officials were present at the meeting.