Remittances drop for third month

Bangladesh's inward remittances have declined for the third month, failing to ease pressure on the dwindling foreign currency reserves.

Remittances sent home by Bangladeshis abroad fell 7.3 per cent year-on-year to about $1.53 billion in October, the lowest in eight months, reports bdnews24.com. 

Bangladesh Bank released the data on Tuesday amid talks with the International Monetary Fund on economic and financial reforms and policies, with an eye on the country's request for $4.5 billion in loans.

Steps taken by the central bank and the government helped the remittance inflow to some extent.

In July, the country received $2.09 billion from expatriates, which was the highest in 14 months. In August, Bangladeshi expatriates sent out $2.03 billion, up 12.58 per cent year on year.

In September, remittances decreased by 10.84 per cent year-on-year to about $1.54 billion as fears of a global recession and volatility in the foreign currency market due to the Russia-Ukraine war continued to affect the country’s economy.

Inflation has continued to increase globally due to the war in Europe and the West’s sanctions on Russia, which means the expatriate Bangladeshis’ cost of living has also increased.

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

In recent months, the central bank further eased paperwork requirements for remittances. At the same time, the government continued cash incentives on the money sent by expatriates to encourage them to use legal channels.

After the rise in remittances in August, a Bangladesh Bank spokesman said the expatriates were trying to send more money to the country by cutting their expenses as the dollar price was high in the market.

But foreign currency dealers and banks capped the dollar rate for inward remittances at Tk 107 following Bangladesh Bank’s instructions after the greenback’s price shot past Tk 120.

On Monday, the rate for dollars sent by doctors, engineers, lawyers, bankers, nurses and other expatriates holding so-called white-collar jobs was raised to Tk 107 from Tk 99.5 to encourage them to send more dollars through the legal channels.

The move came after an IMF delegation asked for details from the Bangladesh Bank about steps taken to control exchange rates, among other things, on Sunday.

A Bangladesh Bank spokesman said: “Bangladesh Bank will come up with a unified formula to determine the exchange rate within the next three to six months. We told the IMF team that the gaps between exchange rates will then come down.”