Remittance hits $1.75bn in 28 days

During the first 28 days of July, Bangladeshi remitters sent home nearly $1.75 billion, marking a hopeful sign for the economy amid the ongoing dollar crisis.   

According to the latest central bank data released on Sunday, Bangladeshis working or living abroad sent an average daily remittance of $62.5 million in the first month of FY24.

The country has been grappling with an acute dollar shortage since the outbreak of the Russia-Ukraine war, leading to high import bills and rapidly depleting foreign currency reserves.

Remittances and exports, both economic mainstays, are expected to play a critical role in protecting these reserves.

In the 2021-22 fiscal year, inward remittances fell to $21.03 billion, down from a record $24.78 billion in the previous fiscal year. However, the situation modestly improved in the just-concluded 2022-23 fiscal year, with a remittance inflow of $21.61 million. June saw a near-single-month receipt of $2.20 billion, marking the highest in 35 months.

June's remittance was the second-highest monthly receipt after the nearly $2.60 billion receipt in July 2020. This robust foreign remittance inflow continued into the first month of FY24, albeit slightly lower than July FY23's receipt of $2.10 billion, with nearly $69.9 million in daily inflow.

Data from Bangladesh Bank shows that private banks channeled over $1.47 billion, while state-owned commercial banks brought in $218.6 million. Two specialized state banks chipped in $54 million, and foreign commercial banks contributed $5.8 million.

Banking sector insiders stated that banks are raising the dollar rate to entice remitters to send remittances through banking channels. Presently, banks are offering Tk 108.5 per US dollar.

According to the International Monetary Fund (IMF) calculation, the central bank's actual foreign currency reserve currently stands at $23.30 billion, which could suffice for meeting four months’ import bills. The IMF's Balance of Payments and Investment Position Manual (BPM-6), used worldwide for calculating foreign money reserves, must be adhered to.

Following the IMF's BPM-6 to comply with the conditions attached to its $4.7 billion loans approved for the country, Bangladesh deducted $6.37 billion used for creating various funds or invested elsewhere from its own reserve calculation.