Impact of dollar appreciation on remittances

The dollar crisis in the country has become evident. In such a situation, ABB, the association of bank executives, and BAFEDA, the association of foreign exchange banks, gave freedom to banks to buy remittance dollars in the first week of November.

After that, the banks started buying dollars up to 124 rupees in remittance. There has been a major change in the expatriate income of the country.

In the first 10 days of November, expatriates sent remittances through legal channels and banking channels amounting to 794 million dollars. 7 crore 94 million USD remittances are coming daily. If this trend continues, it is expected that remittances will exceed 2 billion dollars this month. This information was revealed in the updated report of Bangladesh Bank on November 12.

A review of the data showed that the amount of remittances that came into the country on the 10th day of this month was 4 crore 92 lakh 40 thousand dollars through state-owned banks, 1 crore 94 lakh 50 thousand US dollars through a specialized bank, 72 crore 32 lakh 60 thousand dollars through private banks and 24 lakh 50 thousand US dollars came through foreign banks.

In October of 2023-24 financial year, remittances to the country reached 197 million 76 million US dollars. Earlier, September saw the lowest remittances in the last 3-and-a-half years. In the month under discussion, remittances came to 133 crore 43 lakh 50 thousand US dollars. In the first month of the fiscal year 2023-24, the remittances in July were 19731 million 50 thousand US dollars and in August the remittances were 159 million 94 million 50 thousand US dollars. Besides, remittances came in at US$ 133.43 million in September.

While talking to the bank officials, they said that the banks are not able to pay the import debt due to the dollar crisis. Therefore, to deal with the dollar crisis, many banks have to buy expatriate income at a higher price. On this occasion, the foreign exchange houses suddenly increased the dollar price of remittance by 12 to 14 taka. As a result, at the beginning of this month, many banks were forced to buy expatriate income at 123 to 124 taka per dollar.

In such a volatile situation, the maximum price of remittances has been fixed to control the upward price of the dollar. From now on, with the bank’s own incentive, the rate of the dollar will not be allowed to exceed 116 rupees in any way. As a result, the remittance flow in the remaining days of the current month may not be the same as in the initial week.

According to the latest announcement by the banks, the declared price of the dollar for the purchase of expatriate and export income is 110 taka 50 paisa. According to the latest data of Bangladesh Bank, the interbank dollar exchange rate is Tk 111 today.

Meanwhile, customers have to multiply Tk 126 to Tk 127 to buy one dollar in cash in the open market. People going abroad for medical treatment, education or travel are buying every dollar in cash from the open market.

In the outgoing 2022-23 financial year, the total remittance received was 2 thousand 161 crore 7 lakh US dollars. In the previous financial year 2021-22, the total remittance came to 2 thousand 103 crore 17 lakh US dollars. The highest remittances were collected in the financial year 2020-21. The amount of which was 2 thousand 477 billion 77 million US dollars.