Remittance decreased by 7.5 thousand crores in one month

Bangladesh has experienced a significant drop in remittances in July, attributed to the unrest stemming from the student movement demanding quota reform in government jobs. According to the latest data from the Central Bank, the country received only $190 million in remittances last month, marking the lowest monthly figure in the past ten months.

Typically, the Central Bank publishes remittance figures on the first working day of each month. However, on Thursday, the report was delayed, and the information was not made publicly available on the bank's website. When questioned by journalists, Bangladesh Bank Executive Director and Spokesperson Majbaul Haque cited ongoing work on the report. Later in the day, at around 5 PM, he shared the remittance figures for July via WhatsApp, without a formal report release.

The $190 million received in July represents a decrease from the $197.3 million sent in July of the previous year. This decline is particularly stark compared to the $254.16 million received in June 2023. The drop of $63.22 million month-over-month equates to approximately 7.5 thousand crore BDT.

This decline in remittances coincides with significant socio-political unrest in Bangladesh. The student-led movement demanding quota reform has led to widespread violence and disruptions, including internet shutdowns, which have affected communication and financial transactions. There are reports of expatriates discouraging the use of official banking channels for remittance transfers in protest against the government's handling of the situation, which has reportedly resulted in numerous casualties.

The introduction of a 'crawling peg' on May 8 aimed at stabilizing the foreign exchange market has also played a role. This measure increased the dollar rate by 7 BDT, setting an intermediate rate of 117 BDT per dollar. Despite this, the open market rate for the dollar has surged to 125.50 BDT, reflecting a growing divergence from official rates and exacerbating concerns over the country's foreign reserves.

To mitigate the pressure on reserves, the Central Bank has reportedly issued verbal instructions to offer higher rates for remittances. A deputy governor of the bank directed managing directors of 20 commercial banks, encouraging them to offer rates up to 119 BDT per dollar for remittances. Despite these efforts, the dollar's price in the open market continues to rise, indicating a potential currency crisis.

The student movement, which began on July 1, has led to widespread unrest, with the government reporting 150 deaths linked to the violence. However, some media sources suggest the death toll may exceed 200. In response, students declared a complete shutdown across the country on July 18, which included extensive internet shutdowns, affecting services like Facebook and WhatsApp. While broadband connections resumed on July 23, mobile data services remained disrupted until July 28.

The combination of these factors has created a challenging economic environment, with the declining remittance figures reflecting broader uncertainties and challenges facing Bangladesh's economy. The Central Bank and government are under pressure to stabilize the situation and reassure both domestic and international stakeholders.