The central bank of Bangladesh is buying US dollars from the country's commercial banks in order to stabilise the inter-bank foreign exchange market.

Bangladesh Bank (BB) officials say the move responds to a build up of foreign exchange in the banking system due to a reduction in the opening of letters of credit (L/Cs) against imports.

Greenback purchase

The central bank announced on 13 April that it had purchased around US$700 million from the country's commercial banks with the aim of keeping the inter-bank foreign exchange market stable.

"The flow of foreign exchange has increased in the market because of falling trend in opening of L/Cs against imports recently," a senior BB official is quoted as telling local media.

Falling L/Cs

The value of import L/Cs opened in Bangladesh dropped by 6.7 per cent during the nine months to March 2009 compared with the same period to March 2008.

Import L/Cs worth US$16.3 billion were opened in the nine months to March 2009 compared with the US$17.5 billion of import L/Cs opened in the same period a year before, according to central bank statistics.

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