Bangladesh over import depensence strains forex reserves
Please give us US dollars, we can’t open L/C to import raw materials. ” An appeal from a business leader involved in industries as diverse as steel, cement, textiles, and financial institutions.
100% import-dependent enterprises can’t get a penny, and they can’t survive. With the exception of a few export-oriented businesses that have enough dollars to meet their own needs, other businesses have been plagued by a lack of dollars for the past six months. The business community fears that the situation may not improve even in the coming months as the IMF has asked the Bangladesh Bank to increase its foreign exchange reserves. That means the central bank may not be able to provide enough dollars to meet demand.
Taka depreciated against dollar by over 20% in six months
The ongoing crisis has exposed weaknesses in Bangladesh’s financial management. Foreign exchange reserves dwindle and the local currency, the taka, has lost more than 20 percent of its value against the dollar in six months, creating difficulties for businesses and importers struggling to access dollars
Pressure on foreign exchange still there because of payment obligations against the LCs opened earlier
According to bankers, foreign exchange pressure remains as obligations on letters of credit opened several months ago have not been fulfilled. The good news is that new letter of credit openings have slowed in recent months, but it may take a few more months to clear payments for letters of credit issued before September 2022. He said the next few months will be critical to ensuring stability in the foreign exchange market, which requires maintaining export growth momentum amid looming recession risks in Europe and the United States.
Post time: Feb-22-2023