Remittances decline by 10.27% in July
Remittances from expatriate Bangladeshis declined by 10.27% in July, amounting to $1.97 billion, according to central bank data.
As per the Bangladesh Bank, the country received $2.19 billion in remittances in June this year and in July last year, the amount was $2.09 billion.
Bankers attribute the decrease to the usual trend of lower remittance inflow in the month following Eid-ul-Adha, which was celebrated in June when people typically send more money back to the country.
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The managing director of a private bank said on condition of anonymity that one of the reasons for the decline in remittances is that many banks in the market are not following the rates given by the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (Bafeda).
Expatriates are in a state of indecision about sending remittances as they are getting different rates, he said.
In FY23, expatriates sent $21.03 billion in remittances which was only 2.75% higher than the previous financial year.
Earlier, in FY21, remittances amounted to $24.77 billion, which is the highest ever in a single fiscal year.
A Bangladesh Bank official, who does not want to be named, said despite an increasing number of expatriates from the country, remittances are not rising accordingly. This can be attributed to the mismanagement of remittance rates and markets. On one hand, expatriates' income is decreasing, while on the other hand, the country's reserves are dwindling due to high import costs.
The official mentioned that certain banks are buying remittances at rates higher than those set by the ABB-Bafeda, leading to an increase in their remittance flow. Conversely, some banks are purchasing remittances at fixed rates, resulting in reduced remittance inflow through proper channels.
The country's foreign reserves, which were at $41.82 billion by the end of June 2022, have witnessed a continuous decline, reaching $23.30 billion as of 26 July 2023.
On Monday, the ABB and Bafeda increased the exchange rate of dollars by Tk0.5 to Tk109 for remitters.
Bankers said inward remittances should increase due to the increase in the dollar rate for remittances.
On 12 September last year, the dollar price for remittances was set at Tk108, while it was Tk99 for exporters. Since then, the Bafeda and ABB have increased the dollar price for exporters 12 times and changed the exchange rate for remittances six times.
Meanwhile, the central bank has initiated a special inspection of 12 banks due to concerns about the purchase of remittances at inflated prices. During this inspection, the central bank will monitor if any bank is acquiring remittances or export bills at excessive rates.
A senior official from Bangladesh Bank's remittance department told TBS that one of the reasons behind the country's stagnant remittance growth is the surge in hundi transactions. The scarcity of dollars in the local market has led many large companies to acquire dollars from foreign sources and carry out payments through hundi.
