The central bank of Bangladesh has asked the country's commercial banks to encourage importers to open fresh letters of credit (L/Cs) for five essential foodstuffs to ensure smooth supply of those items during the holy month of Ramadan.

The central bank is also hoping the move will suppress prices for essential foodstuffs, which tend to soar during the Muslim holy month which this year begins in mid-July and lasts for 30 days.

Essential foodstuffs

Fresh L/Cs are sought from importers for purchases of edible oil, gram flour, onions, dates and sugar according to Bangladesh Bank officials.

Commercial banks have also been advised by the central bank to keep the cost of L/C financing low in a bid to prevent bank fees further exacerbating the price hikes often caused by shortages of essential foodstuffs during Ramadan.

Declining L/C trends

The central bank's move has also been seen as one designed to encourage an upturn in declining import trends recorded last month.

The value of import L/Cs opened during April declined by 7.49 per cent compared with the value of similar L/C openings in March according data released by Bangladesh Bank.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.