Remittance drops even before Eid

Remittance dipped in March ahead of Eid-ul-Fitr, in a departure from the historical trend that saw inflows take a spike centring on the biggest festival in the country.

In March, migrant workers sent home $1.99 billion, down 1.23 percent year-on-year, according to data from the Bangladesh Bank.

March's receipts were the lowest in 2024, raising concerns about whether the wheels have come off on the rebound seen in remittance inflows from October last year.

Last month's inflows take the total so far this fiscal year to $17.07 billion, up 6.5 percent year-on-year -- a modest growth given the manpower exports in recent times.

In 2023, a record 13.05 lakh workers went abroad for jobs, up 15 percent year-on-year, according to data from the Bureau of Manpower, Employment and Training.

BB Spokesman Md Mezbaul Haque, however, refused to say whether remittance has decreased last month. "There may be a slight increase or decrease," he said.

The reason for the unusual drop in remittance ahead of Eid is that the unofficial rate of the dollar is much higher than the one offered to remitters through the official channel.

Banks can offer the highest Tk 114.5 per dollar, including the Tk 2.5 government incentive, but some are offering up to Tk 120 per dollar, according to bankers. The official exchange rate is Tk 110.

In the last month, the highest amount of remittance came through Islami Bank: $492 million. This was followed by BRAC Bank ($125 million), Trust Bank ($114 million) and Social Islami Bank ($109 million), BB data showed.

On the other hand, some banks were not able to bring a single penny of remittance in March.

Banks are not offering that high rates now as the foreign exchange market is relatively liquid due to the growing trend of export earnings, said Mirza Elias Uddin Ahmed, managing director of Jamuna Bank.

"This may be the reason behind the dip. While remittance inflow of March was not at the expected level, the trend is not bad," he said.

Exports brought home $38.5 billion in the first eight months of the fiscal year, up 3.7 percent year-on-year, according to data from the Export Promotion Bureau.

Ahmed and Syed Mahbubur Rahman, the MD of Mutual Trust Bank, expressed hope that inflows will start picking up from this week centring on Eid.

Eid-ul-Fitr is expected to take place on April 11.

"We need much bigger inflows of dollars to stop the fall of foreign exchange reserves," said a senior official of the central bank on condition of anonymity.

On Wednesday, reserves stood at $19.45 billion, down by a staggering $533.82 million in a week, due to the BB's selling dollars to commercial banks.