Forex transactions with cards reach an all-time high in May 

Foreign currency transactions with cards reached an all-time high in May at Tk660 crore, which is more than double compared to the same month last year.

This increase is attributed to heightened expenditures on health and foreign travel amid soaring inflation.

According to data from the Bangladesh Bank, the transactions stood at Tk358 crore in May 2022.

The use of cards for foreign currency transactions has steadily increased as travellers find it more convenient abroad, particularly due to a shortage of dollars in the country.

The card-based foreign currency transactions amounted to Tk6,349 crore in July-May of fiscal 2022–23, compared to Tk2,546 crore in the previous year.

Bankers said that people used foreign currency from their debit and credit cards mostly during their travels abroad.

Using cards for foreign currency transactions offers convenience to travellers. They can easily carry and use their cards for payments, eliminating the need to carry large amounts of cash.

Besides, the shortage of dollars in the country's banks and exchange houses has led to an increase in card usage by travellers to cover their expenses overseas.

Abdus Salam Aref, secretary general of the Association of Travel Agents of Bangladesh, told The Business Standard, "A large number of Umrah pilgrims who travelled abroad and made expenditures through cards before Eid-ul-Fitr contributed to the increase in transactions."

He also said that travel is usually high from May to September as schools and colleges are largely closed during this period. Currently, India, Malaysia and Dubai have a lot of passengers.

An official at the central bank said inflation in the global market has increased, due to which travel and medical expenses are almost double compared to before.

He said that a meal that cost $15 in Saudi Arabia a year ago cost $30 this year, due to which the amount of spending has increased.

Cards, especially those issued by international payment networks like Visa or Mastercard, are widely accepted around the world.

Travellers mainly use the foreign currency available on their cards to pay for expenses such as airfare, travel costs, hotel bookings, and shopping expenses, they said.

As per Bangladesh Bank rules, each cardholder can spend up to $12,000 a year as their personal entitlement.

However, the growth in foreign currency transactions through cards was putting pressure on the currency market, bankers said.

The country's foreign exchange reserves came down to $30 billion on July 9 from a record $48.6 billion in August 2021.

Continued sales of foreign currency to settle import payment obligations reduced the country's foreign reserves.

The Bangladesh Bank injected more than $13.5 billion into the financial system in FY23 in order to facilitate banks' import payment obligations.

In the first 11 months of FY23, the country's import payments reached $64.76 billion and its trade deficit was $17.16 billion. The interbank rate of the dollar has been hovering at Tk109 in recent weeks.

In May 2023, transactions through local currency cards decreased by Tk5,264 crore, or 11%, as compared to April.

Tk42,121 crore in local currency was transacted in May. However, it was Tk47,385 crore in the previous month.

Bankers said that since May is the month after Eid-ul-Fitr and the month before Eid-ul-Adha, the transactions have decreased during this period.