The opening of letters of credit (LCs) for imports increased in the first eight months of the 2024-25 fiscal year compared to the same period in the previous year, reflecting a gradual recovery in business activity.
According to Bangladesh Bank data, LC openings rose to $47.28 billion in July-February FY25, up from $45.19 billion in the same period of FY24, marking a modest increase.
The rise reflects a gradual recovery in business activity following months of stagnation caused by political unrest in July and August 2024.
During that period, the country faced significant disruptions due to a student-led mass uprising against the Awami League government鈥檚 authoritarian rule, culminating in the ousting of the Sheikh Hasina-led government on August 5.
A significant portion of the LC surge was linked to preparations for Ramadan, which began on March 1.
Additionally, government imports may have contributed to the spike in December.
However, import patterns varied across sectors.
LC openings for capital machinery and petroleum declined sharply, dropping by 30 per cent and 7.41 per cent to $1.38 billion and $5.92 billion, respectively, during the period.
聽In contrast, imports of industrial raw materials and general goods鈥攃ategories that account for nearly 75 per cent of total imports鈥攕aw notable increases of 6.86 per cent and 12.56 per cent, reaching $16.54 billion and $16 billion, respectively.
The increase in LC openings marks a reversal from the downward trend observed since 2023, when the government and Bangladesh Bank implemented measures to curb import growth and protect foreign exchange reserves.
These measures were introduced in response to the rapid depletion of reserves, which fell from $46 billion in December 2021 to $19.96 billion on March 20, 2025, as per International Monetary Fund (IMF) guidelines.
The decline in reserves has been exacerbated by a depreciating taka, with the interbank dollar rate reaching Tk 122 in March 2024, up from Tk 120 earlier.
This represents a significant depreciation from Tk 84.81 in June 2021, Tk 93.45 in June 2022, and Tk 106 in June 2023.
The rising dollar price poses significant economic challenges. Bangladesh holds foreign debt denominated in US dollars, meaning a weaker taka increases the cost of repaying these obligations.
It puts added pressure on both the government and private businesses. Additionally, a stronger dollar drives up import costs, leading to higher production expenses and consumer prices, exacerbating the country鈥檚 inflation crisis.