Welcome to Business Outlook
Related Articles
Remittances declined 16 per cent year-on-year to $1.49 billion in February, the lowest in the past 22 months, creating a further risk of widening the trade imbalance in the face of surging import bills.
The incoming remittance in February also fell 12 per cent compared to the previous month, according to data from Bangladesh Bank.
Remittances started to maintain a steep downward trend from June to November last year, after which it started to climb up during the December-January period.
However, the dazzling display did not continue last month even though the government increased the cash incentive for remitters on January 1.
The government raised the cash incentive for sending remittance through official channels to 2.5 per cent from 2 per cent in order to tackle the incessant downward trend, hitting the foreign exchange reserves adversely.
But the inflow failed to get its expected momentum despite the government’s efforts as the hundi cartel, an illegal cross-boundary financial transaction system, has returned in full, a central bank official said.
The global economy has almost fully reopened as many nations have successfully contained the Covid-19 pandemic, which has helped the hundi cartel resume operations.
“Many expats are opting for informal channels to send remittance as they now receive more money against the dollar than what banks offer,” said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.
The inter-bank exchange rate stood at Tk 86 per dollar yesterday, but the rate is now around Tk 90 in the kerb market.
Export earnings increased in the recent months but import payments have escalated more, enlarging the ongoing pressure in the country’s external sector, Rahman added.
Exports grew 27 per cent year-on-year to $23.3 billion in the first half of this fiscal year while imports ballooned 54.5 per cent to $39 billion.
The high import payment along with decreasing remittance have already brought a negative impact to the country’s foreign exchange reserves, which stood at $45.13 billion on January 26 in contrast to $46.4 billion on June 30 last year.
Emranul Huq, managing director of Dhaka Bank, said the central bank might consider depreciating the local currency against the US greenback given the peers of Bangladesh.
Such an initiative will encourage remitters to send their hard-earned money through banking channels.
Between June and February this fiscal year, remittances stood at $16.68 billion, a decrease of 19.4 per cent year-on-year.
(TDS)
