Remittance inflow continues to rise year-on-year, hits $2.39b in October

Remittance inflows to Bangladesh reached $2.39 billion in October, marking a significant 21.32% year-on-year increase from $1.97 billion in October last year, according to Bangladesh Bank data released today.

This rise follows a trend seen over recent months, with remittances in September hitting a similar figure of $2.4 billion.

Though the price of the dollar in the remittance market has slightly declined in the past two weeks, it has not impacted inflows much.

Stakeholders attribute this to the confidence remitters have in the current government, as they see a noticeable decrease in capital flight from the country.

According to several managing directors of private banks, since the interim government took charge, capital outflow has decreased, and expatriates are using formal channels, not hundi, to send funds home, indicating renewed trust in the new administration.

Talking on the issue of how remittance growth impacts the dollar crisis in the market, Sohail RK Hussain, managing director of Bank Asia, told The Business Standard, "The current level of remittance inflows is undoubtedly very positive. I believe the reduction in capital flight is a key reason behind this growth in remittances.

"However, remittance alone cannot resolve the entire dollar crisis. Exports have not shown substantial growth, and import demand is lower, staying around $5-6 billion compared to $7-8 billion in previous periods."

Data from Bangladesh Bank shows that remittances from August to October totaled $7.03 billion, a 43% increase from the $4.9 billion received during the same period last year. 

Since the interim government took office, the remittance inflow has risen by $2.13 billion over these three months in comparison.

As of 30 October, the country's foreign exchange reserves stood at $19.87 billion, calculated using the BPM6 standard set by the International Monetary Fund.

Several senior bank officials noted that banks are currently purchasing dollars at around Tk121.50 to Tk121.80, a slight decrease from the Tk122.50 rate offered in early September. Including the 2.5% government incentive, remitters receive up to Tk124.80 per dollar through formal channels. 

Meanwhile, informal "hundi" channels offer rates between Tk126 and Tk127, a gap that has narrowed significantly compared to 2022 and early 2023, when the difference often exceeded Tk7-8.

In October, state-owned banks received $846 million in remittance, while private banks handled $1.54 billion, according to Bangladesh Bank data. 

Among the banks, Islami Bank received the highest amount at $431 million, followed by Agrani, Janata, Rupali, Sonali, and BRAC Bank, which also reported strong inflows.