Inward remittance falls 15% in FY22 amid forex crisis

The remittance inflow dropped 15.11 percent in the just concluding fiscal year amid the forex crisis caused by mainly a big gap between the official and the kerb market exchange rates.

Expatriate Bangladeshis remitted $21.03 billion in the fiscal year 2021-22, down from $24.77 billion in the fiscal year 2020-21, according to the latest data from the Bangladesh Bank.

The remittance inflow declined as the spread between the official and the kerb market exchange rates encouraged Bangladeshi expatriates to send money back home through hundi, an illegal cross-border transaction after the Covid-19 pandemic, said people familiar with the situation.

In June, the country received $1.83 billion, down 5.33 percent year-on-year and 2.54 percent from the previous month, said the BB data.

Usually, remittance inflow increases ahead of Eid-ul-Azha every year but fell this time due to the hundi system, said a high official of the Bangladesh Bank.

During the Covid-19 pandemic, remittance inflow had increased due to the collapse of the informal channels like hundi, he added.

Bangladesh’s inward remittances had hit a record of over $24.77 billion in the fiscal year 2020-21.

“The inward remittance has fallen due to the difference between the official and the kerb market exchange rates, “said Zahid Hussain, former lead economist of World Bank, Dhaka Office, told The Business Post.

“To boost remittance inflow, the gap of the exchange rates needs to be reduced,” he said.

Now, banks and foreign exchange houses sell a US dollar at a rate of Tk 94 to Tk 95 while exchangers outside of the formal banking system were selling a dollar for over Tk 100, the highest in Bangladesh’s history.

The declining trend of remittance has put pressure on the foreign exchange market as banks are now facing a shortage of the greenback to pay import bills.

As a result, the Bangladesh Bank is continuously injecting the US dollar in the country’s banks to maintain the stability of the currency market.

The Bangladesh Bank sold over $7 billion to the banks between July and June of the outgoing fiscal year.

On Wednesday, the inter-bank exchange rate stood at Tk 93.45 per dollar while it neared Tk 100 in the kerb market.

The forex reserves of Bangladesh declined to $41.70 billion.

The remittance inflow has not increased despite a considerable number of manpowers sent abroad after the pandemic.

During the six months of this year, 6,15,518 workers were exported, according to the Bureau of Manpower, Employment and Training, Bangladesh (BMET).