Bangladesh sees highest remittances in 35 months despite dollar crisis

The country receives $2.25 billion in remittances in May

Bangladesh received $2.25 billion in remittances in May 2024, the highest amount in nearly three years.

This represents a significant increase of 33.23 percent compared to May 2023.

This surge in remittances is a positive development for the country's economy, especially during challenging times, as it helps to boost foreign reserves.

Previously, the highest monthly remittances was recorded in July 2020 at $2.59 billion.

According to the central bank, the average daily remittance in May was $72.7 million.

Bangladesh Bank usually releases remittance data on the first business day after the month's end. However, this time, the information was released five days later, breaking their usual practice.

In Bangladesh, expatriates usually send more money during Ramadan, Eid, and Bangla New Year.

However, there are ‘other reasons’ behind the notable increase in remittances seen in May.

This year, Eid fell in mid-April, and Ramadan started in the second week of March. Bankers believe that the devaluation of the taka contributed to the rise in remittances in May, following a 21 percent increase in April.

On May 8, the price of the dollar rose by Tk 7 in a single day.

The central bank introduced the 'crawling peg' system to implement market-based exchange rates as part of a $4.7 billion loan deal with the International Monetary Fund last year.

On that day, the taka's value against the dollar was adjusted from Tk 110 to Tk 117.

Bangladesh has also seen significant year-on-year growth in remittances during April and May, surpassing the ‘expectations’ of Bangladesh Bank.

According to the central bank report, remittances totalled $21.37 billion in the first 11 months of the current fiscal year.

Compared to the same period last fiscal year, the country received about $2 billion more.

Remittances for the first 11 months of the 2022-23 fiscal year amounted to $19.41 billion.

Bangladesh Bank had estimated a 2 percent growth in remittances for the last six months of the current fiscal year, but it exceeded 10 percent in the first 11 months.

For the fiscal year 2022-23, remittances totalled $21.61 billion, marking a growth of 2.75 percent compared to negative growth in the previous year.

RESERVES PRESSURE EASES

There was a positive increase in foreign currency reserves to $24.21 billion at the end of May, following the remittance jump.

According to the IMF's BPM6 system, the gross estimate was $18.72 billion.

According to a May 11 report, the reserves dropped to $18.23 billion after the payment of $1.60 billion import bills to the Asian Clearing Union for March and April.

However, reserves remain significantly lower than on the last day of April.

As of Apr 30, the country's gross reserves were $24.37 billion. Under the BPM6 system, it was $19.95 billion.