However, the overall balance of payment (BoP) showed a slight deficit during the same period due to declining net foreign direct investment (FDI) and foreign aid.

The trade deficit dropped by 12.82 percent during July, 2005-February, 2006 period, down from $260 million during the corresponding period of the previous year and stood at $1.77 billion.

The current account balance now shows a surplus of $232 million, which was a deficit of $405 million during the same period of the previous year.

Last year, the current balance account hit deficit for the first time in three financial years, following which the central bank adopted a cautious monetary policy. Following the tightened monetary policy the country's external balance sheet's position improved, although taka was depreciated against dollar.

During July-February period in the current fiscal year import grew by 9.80 percent which during the same period of the previous year was 26.83 percent.

Fresh opening of letters of credit (L/Cs) for import during the same period increased by 4.02 percent, which was 24.30 percent in the same period of the previous fiscal year.

On the other hand, export during July-February of FY'06 increased by 17.91 percent, which in the corresponding period of the previous year was 17.22 percent.

During July-March of the FY 06 remittance increased by 23.15 percent, which was 12.79 percent during the same period of the previous year.

The decrease in import growth and the rise in export and remittance resulted in a surplus of the current account balance.

But net FDI dropped by 15 percent over the first seven months of the current fiscal year and stood at $473 million and net foreign aid shrank by 90 percent during the same period and stood at $339 million.

Sources said though trade deficit dropped, the overall balance of payment showed a deficit of $59 million during the first seven months of the current fiscal year due to the decline in FDI and foreign aid.