Bilal9
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FE REPORT | October 29, 2023 00:00:00
The inflow of wage earners remittance during the first three weeks of this month (until October 20) stood at US$ 1.25 billion, nearly equivalent to the receipts of the four-week period of the previous month (September 2023), according to Bangladesh Bank data.
The September remittance hit 41-month low at $1.34 billion since April 2020 when it was only $1.09 billion.
People familiar with the matter expected the inflow by the end of October to increase to some extent from that of the September receipts, riding on social programmes especially weddings, Durga Puja and the revised dollar-Taka exchange rate by BAFEDA (Bangladesh Foreign Exchange Dealers Association).
The remitters now receive an additional incentive of 2.50 per cent from banks apart from the government's existing cash support as banks have stepped up efforts to give a much-needed fillip to remittance earnings and mitigate the foreign exchange crisis.
The BAFEDA and the Association of Bankers, Bangladesh (ABB) took the decision in a joint meeting on October 20.
A central banker said that at least $300 million in remittance may be added during the last week of October with a three-week total of $1.25 billion.
To attract remittances, the government had introduced a 2.0 per cent incentive in 2019 and later raised it to 2.5 per cent. Now the banks would provide up to 2.5 per cent from their own coffers.
Remittance is the cheapest source of US dollars for Bangladesh and is a key pillar of the economy. But inflows dropped in September despite a record outflow of workers in recent times.
The US currency has been gaining against the taka for the past one and a half years amid depleting foreign exchange reserves, driven by higher import bills against lower-than-expected remittance and export receipts.
Bankers and experts attributed the decline to the higher exchange rate of the US dollar in the open market, which is attracting expatriates towards informal cross-border money-transfer channels like "hundi".
