Falling letter of credit (L/C) settlements and openings have been recorded in Bangladesh, suggesting that central bank measures to curb spending on imported luxury goods are working.

Bangladesh Bank (BB) is working to contain inflation by discouraging credit flows in unproductive sectors.

Import payments

Data from BB show that the country's import payments fell by US$354 million in August 2012 compared with the previous month.

The central bank says imports of the kind of luxury goods that it is trying to discourage are down, but so are purchases of some essential items such as food grains.

L/C trends

In August, L/Cs worth US$2.482 billion were settled compared with US$2.836 billion of settlements in July, a decline of 12.48 per cent.

The rate of L/C openings also fell by 13.17 per cent to US$2.487 billion in August compared with US$2.865 billion in the previous month.

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