Bangladesh has reported that US dollar-denominated import letter of credit (L/C) openings in June fell to their lowest level for a year, reflecting the continuing difficulties importers there face as the central bank restricts L/C openings to preserve the country's foreign exchange reserves.

Levels of L/C openings have also fallen significantly during the entire Bangladeshi financial year, which ended on 30 June 2023.

Sharp falls

Import L/Cs opened in June amounted to US$4.75 billion, a 44 per cent decrease compared with the same month in the previous year according to data from Bangladesh Bank, the country's central bank.

In May, import L/C openings amounted to US$5.84 billion while import L/Cs opened in April came to US$4.85 billion.

In the financial year ending June 2023, import L/C openings amounted to $69.36 billion, a decrease of 27 per cent year-on-year compared with the previous year when US$94.27 billion worth of L/Cs were opened.

L/C restrictions

Amongst restrictions introduced by Bangladesh Bank are an increase in L/C margins to 100 per cent for certain products and a directive requiring banks to report imports worth more than US$3 million before opening L/Cs.

The restrictions are part of the central bank's efforts to tackle the country's shortage of US dollars.

Bangladesh has moved to reduce its dependency on the US dollar, announcing earlier this month that it had completed its first L/C transactions denominated in Indian rupee (DC World News, 12 July 2023).

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.