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The flow of remittances grew by 9.65 per cent to a record US$16.42 billion in the just-concluded fiscal year (FY) as the exchange rate of local currency weakened against the US dollar.
The figure jumped from $14.98 billion in FY 2017-18, according to the central bank’s latest statistics.
Strengthening supervision and monitoring by the central bank to check illegal ‘hundi’ transaction has also contributed to the increased flow of remittances, officials said.
Bangladesh received $12.77 billion in remittance in FY ’17 and $14.93 billion in FY ’16.
The remittance inflow was estimated at $1.37 billion in June last, down by $387.54 million from that of the previous month.
In May 2019, the amount stood at $1.75 billion.
“We expect that the upward trend in inward remittance will continue in the current fiscal year as the government has announced 2.0 per cent incentive for remittance receipts,” Kazi Sayedur Rahman, executive director of the Bangladesh Bank (BB), told the FE on Tuesday.
The government has already allocated Tk 30.60 billion as subsidies in the budget for this fiscal to encourage expatriate workers to send their money through legal channels.
Monitoring and supervision should be strengthened to avoid possible misuse of public money, the central banker added.
Mr. Rahman, who oversees the Forex Reserve & Treasury Management Department of the BB, said the exchange rate of Bangladesh Taka (BDT) against the US dollar in the banking channel is almost equal to the kerb market in the last three months.
“It has impacted positively to receive the record amount of remittances in the FY ’19,” he explained. Senior bankers, however, said the flow of inward remittance maintained an upward trend in recent months due to the depreciation of taka against the US dollar.
Meanwhile, the local currency depreciated by 77 poisha against the US dollar in the inter-bank foreign exchange market in FY ’19 mainly due to higher demand for the greenback, according to market operators.
The US currency was quoted at Tk 84.50 each in the inter-bank foreign exchange market on Sunday, the last working day of the fiscal, unchanged from the previous level.
It was Tk 83.73 in June 2018.
The higher demand for the greenback for settling the import obligations caused the depreciation. Currently, 29 Bangladeshi exchange houses are operating across the world along with more than 1,200 drawing arrangements abroad to boost the remittance inflow, according to BB officials.
Four state-run commercial banks and dozens of private commercial banks have stepped up their efforts to increase remittance flow from the Middle East, the United Kingdom, Malaysia, Singapore, Italy and the United States.
Most of the banks are now trying to increase the flow of inward remittances from different parts of the world through establishing drawing arrangements with overseas companies, according to insiders in the banking sector.
“We’re trying desperately to increase the flow of inward remittances to meet our own import liabilities,” Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), told the FE.
Mr. Rahman, managing director and chief executive officer of Dhaka Bank Limited, said such initiatives will continue until the improvement of the country’s current account situation.
Bangladesh’s current account deficit continues to pose risks to the macroeconomic stability despite its 35 per cent fall in the July-April period of FY ’19.
The gap stood at $5.06 billion between July last year and April this year, the BB data showed.
The central bank of Bangladesh had earlier took a series of measures to encourage the expatriate Bangladeshis to send their hard-earned money through the formal banking channel, instead of the illegal “hundi” system, which can help boost the country’s foreign exchange reserves.
The country’s forex reserve rose to US$32.57 billion on Tuesday from $32.53 billion in the previous working day.
source (FE)
