Bangladesh’s remittance inflow – a key source of USD – reached $2.10 billion this January. This inflow was $2.19 billion in June last year.
Confirming the development on Thursday, Bangladesh Bank sources say the remittance inflow rose year-on-year by 7.30 per cent this January. The country recorded $1.95 billion remittance inflow in January 2023.
Economists have been criticising the fact that the country had not been able to exceed the $2 billion mark in monthly remittance inflow during the July-December period last year. The figure was $1.98 billion last December, which is 17.15 per cent higher compared year-on-year.
Dhaka Bank Managing Director and CEO Emranul Haque said, “There are two key reasons behind the increase in remittance inflow in January. The USD rate has stabilised, so banks are not holding USD right now.
“As a result, the USD market is normalising. The rate is also a factor in increasing the inflow of remittance. So right now, the USD rate is satisfactory for the remitters, and they had sent more remittances through the banking channel in January.”
Bangladesh has the capacity to acquire more than $2 billion remittance every month, he pointed out.
Haque added that in the winter season, many occasions and programmes are held across the country. So, remitters usually send more money through the banking channel.
Dr Zahid Hussain, former lead economist of World Bank Dhaka Office, said, “We had seen the remittance inflow crossing $2 billion several times during the Covid crisis. This phenomenon indicates that the country has the capability to gain over $2 billion remittance every month.”
He added that the USD rate should be market based, and if the central bank tries to control the rate then remitters will send the remittance through hundi.
An analysis of regulator data shows that during the July-January period of FY24, remittance inflow stood at $12.90 billion, which is 3.61 per cent higher compared to the same period previous year.
In the July-January period of FY23, the amount stood at $12.45 billion.
The central bank has been taking a number of initiatives to boost remittance inflow in the country, but regulator data show these moves have largely been ineffective except in January.
The Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (BAFEDA) have been setting the exchange rates since September 2022 as per Bangladesh Bank decision.
On condition of anonymity, a senior central bank official said, “The banks are not following this rate. Most of the banks are offering their own rate to remitters in recent times.
“Currently, banks are buying remittance at Tk 122 – Tk 124 from remitters and exchange houses, so it is clear that ABB-BAFEDA’s rate is not effective in the banking sector. This official rate disrupted the remittance inflow as well.”
He also said the central bank frequently changes their decision on the remittance rate. Sometimes, the regulator asks the banks to collect the USD under their own offer rate, and sometimes they ask to follow ABB-BAFEDA's rate.
Beneficiaries get Tk 109.75 per USD with 2.5 per cent incentive from the government and additional 2.5 per cent from the banks, while the informal markets are offering up to Tk 123 – Tk 124.
