Textile mill owners and spinners in Bangladesh are finding difficulties in opening letters of credit to import raw materials and cotton.

This is because of the ongoing dollar shortage in the banking sector of the country. Banks are taking more time than usual, ten to 15 days more,to open the letters of credit. Businesses have expressed apprehensions this may affect the import of raw materials such as dyes, chemicals, viscose, staple fiber and cotton, which are considered vital for manufacturing garments that are exported.

When the currency began sliding against the dollar textile and readymade garment exporters in Bangladesh were supposed to gain from the development. But the reality turned out to be different for them as they saw lower profits or even losses.

Bangladesh’s currency depreciated by about 25 per cent against the dollar between February and September, driven by the Russia-Ukraine war.A currency depreciation, if orderly and gradual, usually improves a nation’s export competitiveness, but exporters in Bangladesh could not make the most of the depreciation since they had to buy dollars at a higher price while opening letters of credit to import raw materials needed to serve the global markets.

Most textile and apparel manufacturers in Bangladesh purchase raw materials from international markets and they have had to pay higher prices while opening letters of credit.