Remittance Shows Signs of Decline

July 30, 2024 - Bangladesh is experiencing a noticeable decline in remittance inflows, with the country receiving approximately $1.65 billion in the first 28 days of July, significantly lower than the $2.54 billion recorded in June. This reduction is partly due to a recent five-day internet blackout that disrupted banking and mobile financial services, exacerbating the decline in remittance collections.

Key Points:

1.Internet Blackout Impact: From July 18 to July 23, the internet outage halted remittance collection through formal banking channels, contributing to the lower inflows. During this period, remittance inflows amounted to just $78 million, a fraction of the usual daily average.
2.Increased Exchange Rates: To counter the decline, the Bangladesh Bank has instructed banks to offer higher exchange rates for US dollars, raising the rate from Tk 118 to Tk 118.50 - Tk 118.80 per USD. This measure aims to attract more remittances through official channels.
3.Shift to Informal Channels: The decline in formal remittance channels has led to an increase in the use of the unofficial and illegal “hundi” system. Hundi offers a higher rate of Tk 117 - Tk 119 per USD compared to the banks’ rate, making it more attractive for expatriates.
4.Political and Economic Factors: Political instability and restrictive government policies are also contributing to the declining remittance inflows. The differences in exchange rates between official and informal channels are pushing more transactions towards hundi, exacerbating the issue.
5.Future Outlook: Despite the current challenges, there are efforts to stabilize and increase remittance flows. The Bangladesh Bank and other financial institutions are working on measures to encourage the use of formal channels and improve overall remittance collections.

For comprehensive updates, continue to follow the developments closely.