Inward remittance stumbles in July, stress on forex reserves
Staff Reporter :
Bangladesh’s remittance inflow sharply declined by 24.87 per cent month-on-month in July amid the deadly protests as the banks could not collect the money sent home by the migrant workers because of a five-day internet blackout from July 19 and July 24 across the country.
In July, expatriates remitted $1.9 billion home through banking channels which was $2.51 billion in June this year, according to Bangladesh Bank Spokesperson Md Mezbaul Haque.
The decreased inflow of remittance badly impacted on country’s foreign currency reserves which declined by $1.3 billion in a month as inflows stood lower than outflows for payments, including imports, which reflects the increasing pressure on the country’s external account.
Reserves now stands at $20.48 billion on July 31, down from $21.78 billion a month ago, according to data published by the central bank.
The inward remittance in July was also the lowest in last ten months, according to Bangladesh Bank.
The inflow of money sent by expatriates fell to $1.33 billion in September last year due to the central bank’s restrictions on the dollar rate. Remittance inflows have not fallen below $1.9 billion in any month since then.
In May this year, expatriates sent$2.25 billion, April $2.04 billion, and in March $1.99 billion.
Likewise, remittance inflow in July declined 3.2 percent year-on-year which was $1.97 billion in July last year.
Central bank data also showed that the inflow of remittances, a key source of foreign currencies, stood at $1.43 billion from July 1 to July 20.
After that inward remittance amount to $138 million from July 21 to July 27, the lowest among the four weeks of the month, following the internet outage, hindering banks from collecting much-needed foreign currencies to boost country’s falling forex reserves.
On the last day of July, remitters sent $120 million, Haque said.
Expatriates sent only about $78 million in remittance in the period between July 19 and July 24, while the average daily remittance inflow was about $79 million in the first 18 days of the month.
This is because the recent five-day internet blackout affected remittance collection through banks and mobile financial services (MFS) in the country as government imposed a curfew in the country from midnight past July 19 as unrests over quota reform protests escalated.
More than 200 people were killed and several thousand were injured in the protests since July 16.
An internet blackout starting on July 18 further halted digital and mobile financial services.
The government also declared a general holiday from July 21 to July 23, keeping offices, including banks, closed.
The curfew was relaxed on July 24, allowing offices and banks to open from 11:00am to 3:00pm.
However, several viral videos show Middle Eastern workers being instructed not to send remittances through official channels, protesting the quota reform unrest and communication issues due to the internet blackout.
On the other hand, a video of a state minister and leaders urging expatriates to use legal channels for remittances is also circulating.
Bankers said , in addition to the decrease in remittances through formal channels, hundi transactions have surged over the last week.
Meanwhile, two days after verbally instructing banks to collect remittance dollars at a higher rate, the Bangladesh Bank yesterday directed them not to pay more than the previously fixed rate at Tk118 and has warned of punishment for violating this directive without issuing a show cause notice, on Wednesday.
However, a Bangladeshi expatriate said on Wednesday that the popular exchange house MoneyGram was offering Tk120.58 per dollar of remittances. Additionally, Western Union was rating the remittance dollar at Tk119.50.