Bangladesh’s key economic strength, the remittance inflow, dropped to $1.91 billion in July, marking a 3.24 per cent year-on-year decrease as the nation contends with student movements and social media campaigns advocating for a remittance boycott.
The July figure also represents a significant 24.8 per cent decline from June's inflow of $2.54 billion, which had been the highest in three years.
Bangladesh Bank Executive Director and spokesperson Md Mezbaul Haque confirmed the July 2024 remittance figures to the media, noting that the inflow on July 31 alone was $120 million.
However, he was unavailable for further comments when contacted for additional details.
In the last four days of July (28-31), the total remittance inflow amounted to $341.54 million, while the fourth week of July (21-27) saw an inflow of only $138.06 million. The decline in the fourth week coincided with a nationwide curfew imposed to contain the widespread violence surrounding the quota reform movement, which also led to a three-day bank closure due to government holidays.
Bangladesh Bank attributed the significant decrease in remittance flow to the closure of banking operations during this period.
Mezbaul Haque told The Business Post last Tuesday that the remittance inflow was affected by the banking closure. Concurrently, various social media groups called on expatriates to halt remittances through banking channels, a movement referred to as the “remittance shutdown”.
However, the central bank maintained that the drop in remittance inflow was primarily due to the banking transaction closures in the fourth week of July, rather than the social media campaigns.
The nation received a total of $303.31 million in remittance during the first week of July (1-6). The figure increased to $485.64 million in the second week (July 7-13), before declining to $344.72 million during the third week (July 14-20).
Experts have noted that remittance inflows to Bangladesh typically increase before or during Eid, compared to other months. This pattern explains the surge to $2.5 billion in June, coinciding with the celebration of Eid-ul-Azha.
Speaking with The Business Post, Policy Research Institute (PRI) Executive Director Ahsan H Mansur said that excluding the June figure, the average monthly inflow of $2 billion is unlikely to be achieved again in the future due to the increasing capital flight driven by ongoing unrest.
However, describing the social media campaign of remittance boycott as “an emotional thing,” he assured that there will be no shutdown given that expatriates must continue sending money for family expenses.
Excluding June, the average remittances received in July are consistent with other months this year, indicating that the ongoing USD crisis has not intensified. However, a severe shortage of greenbacks is evident among money changers.
Media reports revealed that money changers in the capital have almost run out of US dollars since the central bank fixed the exchange rate at Tk 119. Unable to sell at the fixed price, they have halted official USD sales. However, US dollars are still being traded at Tk 125 on the black market.
Regarding the US dollar situation in the market, Ahsan H Mansur said, "When capital flight jumps, the demand for USD increases. I believe the overall situation has affected the open market for USD. With the current unrest, everyone is concerned. From government officials to businessmen, everyone will try to safeguard their wealth. Consequently, capital flight is likely to increase during this time."
