<div style="text-align: justify; "><br></div><div style="text-align: justify; "><b>Bangladesh witnessed its highest Letter of Credit (LC) openings in 23 months, amounting to US $6.83 billion in May 2024, amid an ongoing foreign exchange crisis, according to Bangladesh Bank.</b></div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Previously, the highest LC opening was recorded in June 2022, reaching $7.02 billion. Since then, fluctuating dollar exchange rates and the domestic currency, the taka, have generally led to a decreasing trend in LC openings.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In April 2024, LCs worth $5.68 billion were opened. The figures for May show a significant increase of more than 20 percent compared to April. Compared to the same period in 2023, LC openings in May rose by 19.5 percent.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Economists and market analysts attribute this trend to several factors, including tax benefits at the end of FY 2023-24 and the anticipation of the withdrawal of tax exemptions on various products in the FY 2024-25 budget.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Dr. Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), explained to UNB that the increase in LC openings in May was influenced by a more lenient import policy on some items towards the fiscal year's end.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Additionally, traders rushed to open LCs fearing further increases in dollar exchange rates after the central bank raised the rate by Tk 7 in a single move on May 8, 2024, he added.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Trade analyst Dr. M. Mashrur Reaz noted that the increase in LC openings after a long period was also due to an improved dollar supply, thanks to remittances and foreign loan disbursements.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Despite ongoing macroeconomic instability in Bangladesh, trade volume and business transactions have increased in recent months. Government policy support on capital imports also impacted LC openings, Dr. Reaz observed.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Furthermore, the announcement of new taxes on capital machinery imports in the FY 2024-25 contributed to the spike in LC openings. Capital machinery imports were tax-free until now, Dr. Reaz pointed out.</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd24/kh</div>