Remittance drops by 10 per cent in May too

Amidst the dollar crunch, overseas remittance to Bangladesh dropped in May. Remittance coming in last month totalled around USD 1.69 billion (USD 169 crore 16 lakh). This was 10.27 per cent less than the corresponding period last year. The remittance in April too, fell by 16.26 per cent compared to April in the year before. This was revealed in Bangladesh Bank's update in overseas remittance.

Bankers say that normally remittance is strong before Eid. The expatriates send extra money back to Bangladesh for their families' Eid expenditure. But even in April, the Eid month, remittance was not good. This trend continues in May.

The banks are now able to buy remittance at the rate of Tk 108.50 per dollar at the highest. This rate came into effect from 1 June. With the drop in remittance, the banks have pushed up the dollar price for remittance at the advice of the central bank. Earlier the dollar price for foreign remittance was Tk 108.

The dollar rate through hundi (informal money transfer) is around Tk 110. If the banks pay more than the fixed rate per dollar, they will be penalised by Bangladesh Bank. That is why the banks are unable to bring in the funds at higher prices.   

According  to Bangladesh Bank, a total of around USD 1.14 billion (USD 113 crore 62 lakh) remittance came in May through the private banks. In April, USD 1.38 billion (USD 138 crore 35 lakh) came in through these banks. Meanwhile, USD 244.5 million (USD 24 crore 45 lakh) came in through the state-owned banks.  A total of USD 59.9 million (USD 5 crore 99 lakh) came in through the specialised Krishi Bank. In April this was USD 5.5 million (USD 55 lakh.)

According to the central bank records, the remittance in May was USD 6.7 million (USD 67 lakh) less than in April. In April, USD 1.68 billion (USD 168 crore 49 lakh) was sent to the country. In March remittance was USD 2.02 billion (USD 202 crore 24 lakh), which was USD 460 million (USD 46 crore) higher than February's remittance. In February remittance was USD 1.56 billion (USD 156 crore). That was USD 397.6 million (USD 39 crore 76 lakh) or 20 per cent less than January. Expatriates sent in around USD 1.96 billion (USD 196 crore) in January.

The government has taken up several initiatives to encourage remittance to be sent in through the banking system. Even so, remittance through the banks is not satisfactory. There is even a trend of remittance going up one month, only to fall again the next. Remittance gained momentum in January this year, but dropped in February. In March remittance looked up again but fell again in April. It was better in May, but less than the corresponding period of last year.   

The dollar crisis has been prevailing in Bangladesh since March last year. This currency's value is being increased gradually in order to bring more dollars into the country.

Bangladesh Bank fixed the selling rate from its reserves at Tk 106 per dollar, which was previously Tk 104.50. For export revenue, the banks are paying Tk 107 per dollar. As a result, the official dollar rate in imports is around Tk 108. Bangladesh Bank is putting up the dollar price in order to come up with a uniform rate. And the banks are trying to fix the rate of the dollar in keeping with the market.

Finance minister AHM Mustafa Kamal said that work is on to make the dollar rate market-based. He made this statement while presenting the 2023-24 fiscal budget. He presented the budget yesterday, Thursday, in parliament.

Meanwhile, as it is selling dollars to the banks, the central bank's foreign exchange reserves are steadily going down and now stand at USD 29.91 billion. In 2021, reserves had climbed to USD 48 billion.

Finance minister AHM Mustafa Kamal expressed his hope that the reserves would soon start increasing again. He also spoke to reducing imports and increasing exports and remittance in order to take pressure off the dollar.