Remittance exceeds $2b in August too

With a cloud of uncertainty growing over the export due to recession fears in Europe and USA, remittance prospects look promising as the money sent home by expatriates exceeded the $2 billion mark for the second month in a row.

Bangladesh received $2.03 billion in remittances from expatriate workers in August – up 12.6% from a year earlier – owing to pricier US dollar in the formal banking channel and several government incentives, the central bank said on Thursday.

In August 2021, remittances from Bangladeshis working abroad was $1.81 billion.

In July–- the first month of the current fiscal year–- the country received $2.09 billion from Bangladeshi expatriates, which was the highest in the last 14 months. July remittance inflow registered a 12.01% growth compared to the corresponding month last year.

According to the central bank, the country received $4.13 billion in remittances in the first two months of FY23. 

Sector people said money transacted by the expatriates to home has increased due to a dollar price surge in the formal channel and the strict stance of the central bank to stop money flow through informal channels like hundi.

"The dollar rate is almost the same in the kerb market and at banks. That is why expatriates are now sending remittances through banks rather than illegal hundi," said a central bank official.

The greenback was at Tk95 in the inter-bank foreign exchange market on Tuesday. It means banks bought dollars from the Bangladesh Bank at this rate on that day. 

However, banks collected the dollars from expatriates at up to Tk106 due to huge demand. If an expatriate sent $1 to home through the banking channel on that day, they got Tk108.50 per dollar with a government incentive.

Remittance inflows declined 15% in the 2021-22 fiscal year compared to the previous year, when expatriates had sent home the highest amount in the country's history amid the Covid-19 pandemic.

In FY22, expatriates sent $21.03 billion through official channels which was $24.77 billion in the previous fiscal year, according to Bangladesh Bank data.

In the last few months, the number of labour migration averaged more than 80,000 per month while the number was 60,000 before the pandemic. Recruiters said that the uprising trends will continue in coming months too which will positively impact the inward remittance flow. 

"Now, we are getting huge demand from our largest migrant destination Saudi Arabia. Besides, the reopening of the Malaysian labour market is another factor that has boosted the prospect further," MD Tipu Sultan, president, Recruiting Agencies  Oikkya Parishad told TBS.        

The monthly figures of overseas employment of the Bureau of Manpower Employment and Training (BMET) revealed that more than 90,000 workers went abroad in August alone while the number was around 75000 in July.   

A total of 1.11 lakh  workers went abroad in June this year. Around 9.88 lakh workers secured overseas jobs in the immediate past fiscal year, posting a whopping 253% growth compared with the year before, according to data provided by the Ministry of Expatriates' Welfare and Overseas Employment. Before the pandemic, on average 6-7 lakh Bangladeshi workers used to go abroad, mostly to the Middle Eastern countries, each year.

Remittance earners helped the country's foreign exchange reserves stay strong even during the pandemic when the export growth slowed. Apparel exporters are worried about future flow of shipments to European and US markets which are facing record high inflation and recession fears.

The forex reserve burgeoned to $48 billion in August 2021 thanks to plummeting imports and a strong remittance inflow amid the pandemic. As the pandemic waned, the economic reboot met with a surge in imports subsequently. Banks rushed to maintain the dollar supply in the local market.        

According to the central bank data, the trade deficit stood at $33.25 billion at the end of FY22, which is a historic high for Bangladesh. At the same time, the gap in balance of payment exceeded $18.50 billion.

Central bank data show banks that are suffering from dollar shortage purchased $7.62 billion in FY22. In continuation of the last year, banks have continued to face the dollar crisis from the beginning of the current financial year.

According to the latest statistics, the central bank has sold $2.44.8 billion till 31 August.

The forex reserve stood at $39.08 billion on 1 September as nearly $1.7 billion import payment of the Asian Clearing Union (acu) is due in the first week of September. After the payment, the reserve may decline to $37.38 billion. 

Public banks are still charging more for the greenback to settle import LCs. On Thursday, they charged Tk108 while the private banks charged Tk106.