Devastating floods in Bangladesh have precipitated a surge in letter of credit (L/C) openings for imports of staple foods.

The floods are a result of very heavy seasonal rainfall and water running off hills across the Indian border.

Rice losses

Very widespread damage has been caused to crops and to the roads along which domestic staples are usually transported to market. This has substantially increased the country's need for imported food.

Flash floods in northeastern Bangladesh in March caused huge losses of winter rice.

Emergency measures

To redress this and to keep down the price of essential foods, the Bangladeshi government in May announced it would permit an additional 600,000 tons of imported staples.

This has caused an 11.83 per cent surge in L/C settlements to some US$41 billion in the 11 months to May 2017 compared with US$36 billion in the same period a year ago according to Bangladesh Bank data.

L/C openings

Fresh openings of import L/Cs increased to US$44 billion in July-May against US$38 billion in the same period in the previous year.

Bangladesh's imports are expected to continue to rise while the country continues its battle against the severe damage caused by the floods.

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