The country’s knitwear sector procures 80 per cent of its raw materials from domestic sources through back-to-back LCs and if the central bank instructs banks to settle domestic LCs with local currency instead of the US dollar, it would help the country a bit to face the ongoing crisis of foreign exchange reserve, BKMEA said in its letter to bank governor Abdur Rouf Takukder.

In a separate letter to the central bank, BTMA said the BKMEA proposal would not result in anything positive to ease the dollar crisis; rather it would lead to new complexities in export-import activities of other textile-related stakeholders, according to Bangladeshi media reports.

BTMA president Mohammad Ali Khokon said knitwear exporters procure yarn and fabric from domestic mills through back-to-back LCs in foreign currency and there was no scope to take out dollars from the country under the process.

If the bank allows knitwear exporters to settle LCs with local currency, dollars will be concentrated to a handful of people deepening the ongoing crisis, Khokon said.

He said that the BKMEA proposal would create difficulties for textile millers to repay loans to the Export Development Fund due to unavailability of dollars.

Fibre2Fashion News Desk (DS)