Impact of dollar crunch
Staff Correspondent: The acute dollar crisis has had a negative impact on the import of consumer goods. Importers of consumer goods are not able to open LCs on demand due to lack of dollars. As the import of these products has decreased, LC opening has also decreased.
Compared to July-November of the previous financial year, the opening of consumer LCs in the same period of the current financial year has decreased by 44 percent. At the same time, imports decreased by 26.27 percent. This includes daily necessities. According to sources, only two months are left for the start of fasting. It takes one and a half to two months to bring the raw materials of these products to the country and make them in the market. Besides, the finished product should be brought to the country 15 days to one month before the start of fasting.
That is why many feel that the rate of LC opening of daily commodities should have been increased earlier. However, the central bank has now increased the supply of dollars to import daily commodities.
Banks have also taken necessary steps to open LCs for these products quickly. The central bank expects that the opening of LCs for the import of products in this sector will increase.
Imports of daily necessities last financial year were worth $3.22 billion. During the same period of the current financial year, the import was worth $255 million. Imports decreased by 26.27 percent. At the same time last financial year LC was opened for $3.32 billion. In the current financial year, LCs have been opened for $231 million. LC openings fell by 43.72 percent.
Meanwhile, banks are now unable to open LCs without making dollar reserves. Due to which LC opening has further decreased. There must be dollars against the LC or there must be a guaranteed resource that will meet the LC debt. As dollar flow in the market is less compared to import demand, banks are not able to provide dollar advance against LC. Due to which LCO is not able to open.
Analyzing the imports and LC opening, the central bank felt that prices of many commodities, except for a few, have fallen in the international market over the past one year. Due to which the LC in terms of dollar has decreased but the price has decreased but the import of goods has increased more. Earlier LC opening rate in dollar terms increased due to higher commodity prices in the international market. According to them, there will be no shortage of daily commodities in the market during the upcoming fast.
Fasting is starting from the middle of March. At that time there will be daily supply of most of the domestic products in the market. Among them, domestically produced spicy products like onion, garlic, ginger and turmeric have come to the market. As a result, there will be no shortage of them during fasting. There is no problem in reducing the import of these products.
According to the information obtained from the Central Bank report, compared to July-November of the last financial year, the LC of onion has increased by 112.40 percent and the import has increased by 105.77 percent during the same period of the current fiscal year. The reason for this is that LC openings have increased due to the increase in onion prices in India. Onion prices in India were low at the same time last year. Earlier, onions came from Turkey and Myanmar, but now due to the dollar crisis, import LCs cannot be opened from those countries.
During the same period, LC opening of import of spices increased by 92.82 percent and imports increased by 89.87 percent. The demand for spices increases in winter. Because of this, the price of spices has increased in the international market before winter.
In November last year, the price of sugar per kg in the international market was 40 cents, now it has increased to 57 cents. During that time, its price increased by 42.5 percent. Due to which sugar import LC opening increased by 27.76 percent and import increased by 73.93 percent. Its demand is high during fasting. As a result, imports have also increased.
Demand for soybean oil is high during fasting. But imports have declined. However, its price has decreased by 27.91 percent in the international market in the last one year. The price of crude soybean oil was $1,560 per ton in November last year. Now it has reduced to 1 thousand 125 dollars. At the same time, the price of palm oil fell from $997 to $856 per ton. The price fell by 14.14 percent during the discussion period. Due to which LC and import decreased in dollar terms. However, import and supply are normal according to market demand. Compared to July-November of the last financial year, refined edible oil import LC opening decreased by 44.46 percent and import decreased by 51 percent during the same period of the current financial year. Meanwhile, LC of crude edible oil import decreased by 84.25 percent and import decreased by 61.46 percent.
However, many entrepreneurs said that due to the dollar crisis, they are not able to open LCs as per demand. Only those who have access to dollar resources from various sources can now open LCs. Steps have been taken to increase the supply of milk and dairy products produced in the country. As a result, the demand for imports has decreased. Still, the LC opening of import of these products increased by 1.29 percent and imports increased by 7.21 percent.
Different types of fruits are more in demand during fasting. This time, there will be supply of local fruits such as gourd, orange, guava, perennial melon, pomegranate, banana. Still there is demand for imported fruits. The demand for dates is high among them. Date palm import LC opening increased. In addition, overall fruit LC opening has increased by 29.20 percent. However, due to the decrease in opening of LCs, now imports have decreased by 3.77 percent. If the new LC fruits start arriving in the country, the import will increase.
Demand for pulses and chickpeas is high during fasting. Their prices have also come down in the international market. Due to this, LC of imports decreased by 7.59 percent and imports decreased by 19.93 percent. Traders of Old Dhaka’s Moulvibazar said that most of the dollars and chickpeas depend on imports. Production in the country is very low. They are not able to open LC due to dollar crisis.
The price of rice in the international market is increasing again after a slight decrease. The price of rice per ton was $430 in November last year. Now it has increased to $602. Its price increased by 39.93 percent during the discussion period. At the same time, the price of wheat decreased from $317 to $237. The price fell by 25.13 percent during the discussion period. Compared to July-November of the last financial year, the LC opening of rice and wheat imports decreased by 47.75 percent and imports decreased by 27.59 percent during the same period of the current fiscal year. As the bumper crop of rice in the country has reduced its import. Meanwhile, wheat imports decreased in dollar terms, but increased in volume due to lower prices in the international market.
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