The opening of import letters of credit (LCs) dropped about 25.38% in the July-March period of ongoing FY23 due to various import restrictions, media reported citing Bangladesh Bank data.
The central bank data also said that the LC opening dropped to $51.36 billion in the period, a decrease of $17.48 billion compared with that $68.84 billion in the same period of FY22.
Imports of capital machinery, intermediate goods, consumer goods, and industrial raw materials significantly declined during this time.
Among the consumer goods, LC opening for import of fruits, onions, milk food, and rice dropped by 36.51%, 31.43%, 10.63%, and 9.39% respectively against that in the same period in the previous fiscal.
Imports of consumer and intermediate goods also decreased by 15.99% and 30.91%, respectively, totaling $6.19 billion and $4.1 billion in the nine months of FY23.
LC’s opening for capital machinery was $2.29 billion in the first nine months of FY23, compared with that of $5.19 billion in the same period of the previous financial year.
LC settlement or import payments also declined by 5.87% to stand at $57.05 billion in July-March in FY23 compared with that $60.61 billion in the same period in FY22.
Bankers said that imports declined drastically due mainly to a dollar shortage on the market, which compelled many businesses to reduce their imports.
Moreover, a number of banks are struggling with the dollar crisis and are unable to fulfill their LC payment obligations.
The country’s trade deficit narrowed to $13.82 billion in the July-February period of FY23 compared with that of $22.43 billion in the same period in FY22 due mainly to a fall in imports.
According to the Bangladesh Bank data, the Taka depreciated by 12.5% in the past nine months.
The interbank exchange rate rose to a record Tk107.4 a dollar on April 6 while the rate was Tk84.8 a dollar in August 2021.
To stabilize the forex market, the Bangladesh Bank sold over $11 billion to banks in the past nine months of FY23 while in FY22 it injected $7.62 billion into the financial market.
The dollar sales have also contributed to the decline in the foreign exchange reserve of the country.