Remittance inflow falls for 5th straight month

The remittance inflow dropped for the five consecutive months as it continued to take a hit of the Covid-19 pandemic.

Expatriate Bangladeshis remitted $1.64 billion in October this year—the sharpest fall of 21.65 per cent from the same period a year earlier, according to the latest data from Bangladesh Bank.

It was a 4.62 per cent fall from a month ago.

When the remittance inflow gained its momentum amid the pandemic, experts and bankers had predicted the inflow would not sustain as there have been no new manpower exports since March last year.

The “hundi” system, an illegal cross-border transaction, has increased after strict restriction, which was another reason behind the decline in remittances.

From July through October, Bangladeshi expatriates sent $7.05 billion, down 19.96 per cent from the same period of last fiscal year, the BB showed.

During the pandemic, the remittance inflow had increased due to the collapse of the informal channels like the hundi system, said Zahid Hussain, former lead economist of World Bank’s Dhaka office.

For this, the country received a record remittance last year but now the informal channels are back to business as most of the countries have lifted the travel ban, he said.

Mutual Trust Bank Managing Director Syed Mahbubur Rahman said that the inflow of remittance kept falling, which was expected as a huge number of Bangladeshi expatriates returned home during the pandemic.

The decline in remittances put pressure on the country’s external payment needs for imports, he said adding that if the trend continues in the upcoming months, the forex reserve will also shrink.

As of Monday, the interbank exchange rate stood at Tk 85.70 per dollar, which was at Tk84.80 on July 5 this year, central bank data says. In the last three months, the local currency devalued Tk 0.85 against the greenback.

As of October 27, the country’s foreign exchange reserve stood at $46.54 billion, according to the BB.

Amid the circumstances, the government and the central bank will have to be more cautious in case of lending from the reserve, as the import payment will increase more in the days to come, experts suggested.

Former Trust Bank Managing Director Faruq Mainuddin Ahmed said the remittances provided income support for family members back home amid the pandemic. “Several migrants returned home permanently during the pandemic, which is one of the reasons behind the falling remittance inflow,” he said.

Private commercial banks received $1275.26 million, state-run banks $ 328.48 million, foreign banks $7.92 million, and specialised banks $35.21 million as remittances in October, according to the BB data.

Bangladesh received the highest remittance from the Kingdom of Saudi Arabia (KSA), followed by USA, UAE, UK, Kuwait, Malaysia, Oman, etc.