Bangladesh receives $2.1bn in remittances in July, highest in 14 months

The upward trend will bring down the current balance deficit, officials say

The upward curve of remittance inflow continued throughout July as Bangladeshi expatriates sent out $2.1 billion in the first month of the fiscal year with a 12.3 percent year-on-year rise.

The remittances received through the banks last month were the highest in 14 months, surpassing the June inflow by 14.1 percent.

Officials at the central bank believe the upward trajectory will cause the current foreign transaction balance deficit to shrink.

Bangladesh Bank spokesperson Md Serajul Islam said, “Along with expanding incentives, the government is providing policy support to encourage expatriates to send remittances [through legal channels].”

According to him, the national bank was also encouraging the non-resident Bangladeshis to send remittances while the higher price of dollars in the country bolstered the efforts.

The central bank ended tight control on the dollar exchange rate, reintroducing a floating rate on May 30 after the taka continued to lose its value against the US dollar.

Since the dollar rate peaked to Tk 111 in the open market, the banks bought off remittance from money exchange companies at over Tk 100 against per dollar. Some banks bought dollars at Tk 107 last week.

On Thursday, dollar rates at banks were on a par with that of open markets and triggered a crisis.

The central bank is lowering the value of the taka, last reducing it by Tk 0.5 to Tk 94.70 against the dollar.

Bangladesh saw inward remittance slump by 15.12 percent to $21.03 billion year-on-year in 2021-22 after growing by more than 36 percent to $24.78 in 2020-21.

The fall in remittances last fiscal year put pressure on import expenditure and brought about a crisis in dollar supply. This is contributing to the spiral in the price of the US dollar, which is used as the chief currency for foreign trade.

The government raised the cash incentive for remittances to 2.5 percent from 2 percent to encourage expatriates amid concerns over the slump. It also eased the requirement for paperwork to send in any amount of money in a day.