BB goes further to monitor imports

In a bid to contain the current volatility in exchange rates, the Bangladesh Bank yesterday went further to scrutinise imports of up to $3 million.

The new measure comes less than two weeks after the central bank directed banks to submit information regarding imports amounting to $5 million and above before opening letters of credit (LCs) for private businesses.

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The development follows a series of steps taken by the BB to restore stability in the foreign exchange market amid a gradual drop in forex reserves resulting from a high current account deficit, which occurs when total imports exceed total exports.

The current account deficit stood at $17.23 billion in the July-May period of the fiscal year of 2021-22 as import costs overshot exports while remittance fell, according to the BB.

Imports grew 39 per cent year-on-year to $75.4 billion during the period, exacerbated by spiralling commodity prices and supply bottlenecks stemming from the Russia-Ukraine war.

Earlier this month, the central bank asked banks to take up the full payment in advance when opening LCs for luxury and non-essential items after its initial bid failed to cool down imports.

In May, the BB imposed a margin of up to 75 per cent on a number of imported items, including cars and other non-essentials.