Dollar crisis may exacerbate food, commodity prices volatile further

Staff Reporter :
The ongoing dollar crisis is exacerbating food and commodity prices volatile in the local market as many banks are now unable to open letter of credits (LCs).
Traders and importers said the market volatility may worsen further, if the situation does not improve immediately.  
People are already in a big trouble due to the excessive price volatility and spikes in food and commodity prices.
The greenback crisis has also put the small and the medium scale businesses in trouble. Many of them are squeezing their firms due to higher cost. Some are failing to open LCs as per demand.
But the Commerce Ministry and Bangladesh Bank do not have any priority list for opening LCs. As a result, many important imports including industrial capital machineries, raw materials and food have decreased.
If the import of industrial capital machineries and raw materials decreases, the economy slows down. It also impacts on investment, employment and revenue collection. On the other hand, if the imports of food and commodities decrease, the prices go up. All are happening in the country’s economy. The imports of wheat, rice and pulses has decreased by 9 lakh tonnes during the last four months (July-October) period, according to Bangladesh Bank data.
The traders said the central bank imposed 100 per cent margin on the import of some products in last July. Defying this, they were opening LCs. But, the opening of LCs has declined significantly in October for lack of sufficient dollars.
The banks are only allowing the businesses, who have export earnings and big firms, for open LCs, the traders alleged.
Even, the many banks are now unable to open LCs for importing food and essentials commodities, they said.
Admitting the recent import disruptions, bankers said the greenback crisis has intensified over the past two-three weeks as LC opening for essentials was quite normal even in September.
They said few companies with good limits are only making it to the LC opening, albeit after multiple failed attempts to different banks.  
For example, City Commodities – a reputed consumer goods importer – approached Bangladesh Commerce Bank’s Khatunganj branch for opening a $3.23 lakh LC to import chickpeas. But the importer was turned away.
Subsequently, the importer was able to open the LC with Islami Bank Khatunganj branch after making rounds to at least three other banks for two-three weeks.  
Nurul Alam, Chairman of ATR Trading in Chattagram, said, “Bank informed me to arrange dollar before opening LC for importing seeds worth $1.05 lakh. Earlier, we had tried to rice but failed. As a result it is too difficult to survive now. “
Importers said the delay and disruptions in LC opening has already contributed to the surge of food items.