Higher dollar rate boosts remittance flow

The Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (Bafeda) recently implemented a devaluation of the dollar exchange rate, reducing it by Tk0.75 in two stages starting from November 23. Consequently, there has been a slight decline in the flow of dollars compared to the previous month; however, it has witnessed a notable year-on-year increase of 21.38% compared to the same period last year.

To maintain client commitments, many banks are actively acquiring remittances at a higher rate of Tk122-Tk123. 

According to the latest data from Bangladesh Bank, migrant workers remitted $1.93 billion in November, a slight decrease from the $1.97 billion recorded in October. 

Nevertheless, this inflow surpasses the $1.59 billion received during the same month in the previous year.

Further analysis of the data indicates that the average daily inward remittances for November amounted to $4.3 million. Notably, the first 17 days of the month saw a higher daily remittance of $9.8 million, emphasizing fluctuations within the month.

Following the depreciation of the dollar against the Taka by Tk0.5 on November 22, implemented by ABB and Bafeda, effective from November 23, the average daily remittances stood at $2.2 million for the subsequent two days. 

However, this figure gradually declined towards the end of the month (November 29) by a further Tk0.25.

After undergoing two rounds of devaluation, the maximum dollar buying rate was set at Tk109.75, while the maximum selling rate was fixed at Tk110.25. 

Notably, ABB and Bafeda's latest circular indicated that these revised rates were intended to take effect from December 3. 

Bankers reported that they were not receiving remittances at the rates specified by the authority, leading them to incur additional costs. In many instances, the dollar is being sold at rates that differ from those announced in the interbank circular.

Banks, compelled to purchase dollars at higher rates, are passing on the extra costs to importers of dollars. They clarified that this practice has been approved by the central bank to bolster the country's reserves.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, highlighted the prevailing situation regarding the high price of the dollar. 

He mentioned that several banks are receiving remittances at Tk122-123 due to prior commitments. 

Asked about the impact of the dual-phase devaluation of the dollar exchange, he explained that it would take a week to gauge the full extent of the price drop. 

The true impact would only become apparent when transactions align with the revised rates, and he anticipated that, in the coming days, transactions would still adhere to the old rates.