Remittance inflow dips 21.47% in Aug

Bangladesh’s remittance inflow declined by 21.47 per cent in August to $1.59 billion, compared to $2.03 billion recorded during the same month last year. The figure also dips when compared to last month’s take of $1.97 billion, marking a 19.28 per cent decrease.

In the first eight months of 2023, Bangladesh’s remittance inflow declined by 1.6 per cent. The figure was $14.69 billion from January to August this year, compared to $14.93 billion last year, show the central bank data.

So far, the country’s remittance inflow hit the annual monthly lowest in February with $1.56 billion, followed by the second lowest dip of $1.59 billion recorded in August. The decline comes at a time when the country's forex markets have been facing a USD shortage.

Speaking to The Business Post on Sunday, Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman said, “It is very surprising that the remittance inflow has dropped suddenly.

“This drop in remittance indicates that a number of remitters sent their money through Hundi instead of banking channels. Every month, about 1 lakh remitters go abroad, but remittances came in less than expected.”

So, the central bank should investigate the key reason behind the issue, he said, adding that if this is happening for a higher currency rate or any other reason, the central bank should reveal it.

North South University Assistant Professor Dr Mohammad Jalal Uddin Sikder said, “The reason behind remittance inflow decline is the gap between the kerb market foreign exchange rate and Bangladesh Foreign Exchange Dealers Association (BAFEDA)'s prescribed rate.

“Remitters get more money on the market compared to legal channels. So, the government should take the necessary steps to boost remittances through legal channels.”

It should be noted that in June this year, the country received more than $2 billion in remittance, and this figure was $1,973 million in July.

A senior Bangladesh Bank official, on condition of anonymity, said, “The government is now offering higher rates for remitters, and the 2.5 per cent incentive is still available as well.

“As a result of these initiatives, we expect that Bangladesh’s remittance inflow will be averaging out at around a monthly $2 billion figure in the months ahead.”

For remitters, the exchange rate was increased by Tk 0.50 to Tk 109.50 last month. The decision came at a meeting of the Bangladesh Foreign Exchange Dealers Association and the Association of Bankers, Bangladesh (ABB) last Thursday.

Remitters got Tk 109 per $1 in August. But following the meeting, the banks offered remitters Tk 109.50 from Sunday.

In terms of export earnings, the USD rate has been gradually increased by Tk 1 to Tk 109.50. Besides, the price of the USD has also been increased by Tk 1 to Tk 110 in the settlement of imports.

Bangladesh has been witnessing a USD crisis since last year. As a result, Taka has depreciated continuously. The USD rate stood at Tk 84.80 on July 26 last year.

As a result of the USD crisis, the amount of foreign exchange reserves in Bangladesh has decreased steadily. On August 30, the country’s reserve position was $23 billion as per the IMF method.