The opening of letters of credit (LCs) for imports increased slightly in the fiscal year 2024–25, suggesting a modest recovery in trade activity following months of political unrest and economic uncertainty.
According to data from Bangladesh Bank, LC openings rose by just 0.18 per cent year-on-year to $69.01 billion, compared with $68.89 billion in the previous fiscal year.
The uptick, despite limited, signals the beginning of a rebound after a student-led uprising that culminated in the fall of the Sheikh Hasina-led Awami League government on August 5.
The unrest in July and August had disrupted both domestic trade and international transactions, with many importers deferring procurement due to uncertainty and liquidity concerns.
Despite the overall improvement, the data reveals persistent weakness in key areas.
LC openings for capital machinery plunged by 26 per cent to $1.98 billion in FY25, reflecting continued investor reluctance to commit to long-term industrial expansion.
LC openings for industrial raw materials also edged down by 0.15 per cent to $23.44 billion, indicating that the manufacturing sector remains cautious amid ongoing political and economic instability.
Government-related imports saw a temporary surge in December, pushing up LC volumes in the ‘others’ category, which includes a wide array of commercial and industrial goods.
LC opening under this category rose by 5.63 per cent to $23.67 billion, partially offsetting the declines in capital machinery and raw materials.
LC settlements, which represent actual import payments, rose by 4.18 per cent year-on-year to $69.45 billion in FY25, up from $66.67 billion a year earlier.
The increase marks a departure from the import-suppression measures that had been in place since 2023, when the government and central bank imposed strict controls to protect dwindling foreign exchange reserves.
Bangladesh’s foreign exchange reserves, which stood at $46 billion in December 2021, declined to $25 billion on July 24, 2025, under IMF reporting standards.
The reserve levels have slightly improved in recent months due to disbursements from the IMF and World Bank.
But the situation worsened by the continued depreciation of the taka. The interbank exchange rate reached Tk 123 per US dollar in June 2025, compared with Tk 106 a year earlier.
The weakening currency is inflated the cost of debt repayment for dollar-denominated loans and driving up import prices. This has pushed production costs higher and contributed to sustained inflation, which remains a major concern amid broader macroeconomic instability.