Imports surge ahead of Ramadan, concerns over market manipulation, dollars rate
Imports have increased significantly ahead of Ramadan, the holy month of fasting for Muslims, as traders have accelerated the opening of Letters of Credit (LCs). Compared to the previous six months, imports have risen for most essential items, ensuring there should be no major supply issues.
The Bangladesh Trade and Tariff Commission (BTTC) shared this with the Commerce Ministry after analysing demand, imports, LC data, and domestic production. Traders are confident that a supply shortage is unlikely, and global markets remain stable. However, concerns persist over the rising value of the US dollar, which could lead to price hikes.
Market experts warn that despite stable imports and adequate supplies, prices can still rise due to manipulation in the local market. They highlight the need for strict monitoring at every stage of the supply chain. In the past, factories have shut down under various pretexts, causing artificial shortages and driving up prices.
Analysts have also urged the government to ensure that duty exemptions on key products like edible oil and sugar benefit ordinary consumers.
Ramadan is expected to begin in the first week of March. LCs for Ramadan-related imports will continue to be opened until the last week of January, with wholesale sales of these products starting in February. Ahead of this, the Tariff Commission reviewed the market situation and submitted a report to the Ministry of Commerce on 9 January. The report revealed that from 1 July to 5 January of the current fiscal year (2024–25), the rate of LC openings for items like unrefined sugar, rice, lentils, chickpeas, and dates has increased compared to the same period last year.
For example, LCs for importing 86,000 metric tons of dates have been opened this year, compared to 48,000 tons in the same period last year—a 79 per cent increase. Similarly, LCs for 189,000 tons of chickpeas have been opened, marking a 60 per cent rise, while LC openings for lentils increased by 21 per cent to 202,000 tons.
On the other hand, LC openings for onions have decreased. However, this is unlikely to impact the market, as domestically produced murikata (shallot) onions are currently available, causing prices to drop. Additionally, the main onion season, featuring onions grown from seeds, will extend through Ramadan.
According to the National Board of Revenue (NBR), imports of Ramadan staples are already underway. Between 1 to11 January, approximately 40,000 tons of chickpeas, 56,000 tons of peas, 13,000 tons of lentils, 177,000 tons of palm and soybean oils, and 43,000 tons of unrefined sugar were imported, ensuring that pipeline supplies are arriving as planned.
After the interim government assumed office, prices of essential goods began rising in September-October last year. In response, customs duties and taxes on several daily commodities were reduced from mid-October. These included rice, eggs, soybean oil, palm oil, sugar, onions, potatoes, and dates. Following this move, the initiative to import goods increased.
The Tariff Commission, in a report submitted to the Ministry of Commerce, stated that due to the duty reductions, prices of daily commodities like rice, edible oil, and dates are expected to remain stable during Ramadan. However, it highlighted the need to closely monitor the storage and supply of lentils and chickpeas due to rising prices in the international market.
TK Group, a leading importer and processor of edible oil, wheat, chickpeas, lentils, and peas, shared their outlook on the market. Shafiul Athar, a director at TK Group, stated that despite high international prices for chickpeas, imports will be sufficient, and there will be no shortage of essential commodities such as edible oil, lentils, and peas. He noted that the current stability in global market prices is a positive sign, but any rise in the value of the dollar could increase import costs and consequently the cost of goods.
The Tariff Commission also emphasised the importance of maintaining a stable foreign currency value to manage import costs effectively. It suggested that Bangladesh Bank take necessary measures in this regard. According to sources at Bangladesh Bank and commercial banks, since the interim government took office in August, the official dollar exchange rate for imports has risen from around 120 taka to 123 taka. Importers now have better access to dollars at this rate, easing the dollar crisis.
Foreign exchange reserves have also improved slightly, standing at USD 21.68 billion under the internationally accepted BPM 6 accounting method, compared to USD 24.8 billion last August. Over this period, Bangladesh has repaid a significant portion of its foreign debt, amounting to USD 3.5 billion.
Despite reduced duties on rice imports, the situation for rice remains challenging. Rice imports have not increased significantly, and prices in the domestic market are rising even during the peak season. According to the Trading Corporation of Bangladesh (TCB), the price of coarse rice has increased by four taka per kilogram in the past week.
Khandaker Golam Moazzem, research director at the Center for Policy Dialogue (CPD), cautioned that opening of LCs does not guarantee actual imports. Close monitoring is required to ensure that goods are indeed imported against the LCs. He also pointed out that the daily commodities market relies heavily on a few large traders. Any supply disruption from these traders could destabilise the market, which must be monitored on a daily basis.
He further observed that the higher dollar rate this year and elevated global market prices have increased import costs. He stressed the importance of ensuring that prices do not rise due to any other factors, such as market manipulation.
*This report, originally published in Prothom Alo print and online edition in Bangla, has been rewritten in English by Farjana Liakat