Remittance inflow to Bangladesh increased by $2.3 billion in the 2023-24 financial year compared with that in the previous financial year amid a rise in dollar rate.
Bangladesh Bank data showed that remittances reached $23.9 billion in FY24, up from $21.6 billion in FY23, marking the highest level since FY21 when it hit $24.77 billion.
In June 2024 alone, remittances soared to $2.54 billion from that of $2.25 billion in May.
The inflow in June was the highest single-month inflow since July 2020 when it peaked at $2.59 billion amid the Covid pandemic.
The inflow was $2.19 billion in June of the previous year.
On May 8, the Bangladesh Bank devalued the local currency to Tk 118 per US dollar from Tk 110, adopting the Crawling Peg Exchange Rate System for buying and selling dollars.
This devaluation has made formal channels more attractive for expatriates, offering a higher rate for the dollar and reducing the gap with informal channels.
As a result, more remittances are now flowing through official means. Previously, significant price differences between formal and informal channels led many to prefer the latter.
However, the dollar price hike raised operating costs for businesses, leading to concerns about higher consumer prices.
Remittance inflow also typically rises during Eid-ul-Fitr and Eid-ul-Azha, the two biggest religious festivals for the Muslims.
This year, Eid-ul-Azha was celebrated on June 17 and Eid-ul-Fitr on April 11, contributing to the increased remittance inflow during those months.
In response to the severe dollar crisis, the Bangladesh Bank has sold nearly $33.5 billion over the past 35 months.
As of June 27, Bangladesh鈥檚 gross foreign exchange reserves reached $22 billion, according to International Monetary Fund guidelines.
To boost remittance inflows through formal channels, the government and central bank have implemented various measures.
On January 1, 2022, the cash incentive on remittances was increased to 2.5 per cent from 2 per cent to encourage migrants to send more money through the banking channel.
Additionally, a recent Bangladesh Bank circular stated that expatriates no longer needed to show documents to send any amount of money to the country. This measure aimed to simplify the process and increase formal remittance inflows, helping to address the ongoing dollar crisis.
Despite these efforts, dollar shortage continues to impact the market.
Many businesses struggle to settle import payments and open letters of credit, posing substantial challenges for their operations.
