Staff Reporter :
Expatriates have sent $2.03 billion remittances, while import payment has declined by 25 per cent in August that would help stabilize the country’s foreign exchange market.
According to Bangladesh Bank data released on Thursday, the inflow of remittances in August was 12.60 percent higher compared with the corresponding month a year ago. However, the inflow was slightly lower than $2.09 billion in July, the first month of fiscal 2022-23.
On the other hand, payments against Letters of Credit (LCs) in August decreased by 25 per cent compared with the previous month. LC payments stood at $5.93 billion, down from $7.42 billion in the previous month, the BB data showed.
Amid the declining foreign exchange reserves due to the rising import bills, many private banks are now bringing in home more remittances than the public sector ones.
Different private banks are buying dollars at a higher rate than state-owned ones, which is helping them get more remittances, bankers said.
In August, Islami Bank channeled the highest $430 million, Agrani Bank $132 million, Pubali Bank $114 million, Dutch-Bangla Bank $101 million, and Rupali Bank $100 million in remittances.
Bangladesh saw its inward remittance drop by 15.12 percent to $21.03 billion year-on-year in FY22 after growing by more than 36 percent to $24.78 billion in A Bangladesh Bank official said the country’s foreign exchange reserve has been decreasing in recent months due to the falling remittances and higher import payments against slower-than-expected export earnings.
August is the second month of the current fiscal year, the opening of LCs by importers stood at $5.31 billion, a 17 per cent decrease from $6.22 billion in the previous month.
The central bank report shows that LC settlements were $6.85 billion in January this year, $6.55 billion in February, $7.67 billion in March, $6.93 billion in April, $7.25 billion in May and $7.75 billion in June.
Bangladesh has fallen into a record trade deficit due to the massive increase in imports compared with the country’s exports post-Covid and the skyrocketing price of all types of products including energy in the global market.
The trade deficit stood at a record $33.25 billion at the end of the previous fiscal year. At the same time, the current account deficit also surpassed $18.50 billion.
The reserves on Wednesday stood at $39.05 billion compared to $39.21 billion the day before and it stood at $39.59 billion at the end of July compared to $41.82 billion in June this year.
Between Monday and Wednesday, the banking watchdog had sold $367 million to different banks to help both the governments and businesses settle import bills for essential commodities, the official said.
Around $2.50 billion were supplied to the market by the central bank from its reserves between July and August. It also injected a record of $7.62 billion into the market in the last fiscal year.
The latest drop in the reserves will create pressure on the exchange rate of the taka against the US dollar further, a Bangladesh Bank official said.
The fall of taka’s exchange rate means import payments will swell further, which will hike the price of imported commodities.
The exchange rate of the taka against the US dollar stood at Tk 95 Thursday, up 11.5 per cent year-on-year. The exchange rate for the importers, however, experienced an around 20 per cent year-on-year fall.
