Remittance from USA tops Q1 outlook

Money transferred by Bangladeshi expatriates from the US to home was the highest $1 billion in the first quarter of the current fiscal year, show the Bangladesh Bank data.

For the last two years, the US had been in the second position in Bangladesh remittance outlook.          

Sector people said investment opportunities in the US before the permanent residency permit have shrunk, giving a boost to money transfer back home. Besides, many Bangladeshi students who migrated to the country for study are also sending dollars home, eventually contributing to the remittance earnings.      

According to the central bank data, remittance inflow from the US dropped 23% in September compared to August. 

Still the US remittance performances helped slip Saudi Arabia, who had been in the first position for years, to the second position in FY23. Mainly unskilled Bangladeshi labourers are the main source of remittance earnings from the country located on the Arabian Peninsula.    

Remittance from Saudi Arabia also dropped in September compared to August. But the decline is below the 10%-mark, as overall remittance fall in September is more than 24% compared to August.   

But September remittance decline from the United Arab Emirates shows a drastic fall of 41% – which is more than the overall count.

Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue (CPD), points the finger at Hundi – an informal money transaction channel for expatriates.  

"The UAE acts like a Hundi hub," Towfiqul told The Business Standard. 

He said Bangladeshi businessmen are now investing in various sectors including real estate in the gulf countries, which shoots the demand for foreign currencies. Hundi naturally rises to supply the currency demand.

However, bankers attribute the remittance fall to setting a uniform remittance rate for banks at Tk108. The rate further declined to Tk107.50. Prior to the uniform rate setting by the central bank, banks used to collect remittances at Tk111-Tk112 amid a global greenback volatility.

Bangladesh bank data substantiate the account by bankers. Bangladesh received $1.12 billion in the last 13 working days of August – $86 million a day on average. In 15 days of September after the rate fixing, the remittance inflow registered a total of $944 million – only $63 million per day.               

Bankers had already been expressing concern that remittances may decline if a uniform rate is set. The money exchange houses also echoed the same as they said fixed rate will deter them from offering more to the remitters. The money changers said the move might revitalise the Hundi further.   

About the USA coming to the first place, Towfiqul Islam Khan said Bangladesh's remittance from the Middle East have decreased compared to before. This has led the US to grab the first place though the inflow did not grow significantly. 

Remittances from Japan – who is in 18th place in remittance ranking – fell by nearly two-thirds in September compared to August. In August, more than $13 million came from the country in remittances that dropped to $5 million in September.

Kazi Sarwar Habib, a Bangladeshi who has been staying in Japan and also a Commercially Important Person (CIP), told The Business Standard that the number of Bangladeshis nationals coming to Japan is low compared to other countries. 

He said fixing the dollar rate might have hurt remittances from Japan. Apart from this, Bangladeshi expats in the island nation are also reducing their investment as there are too many investment terms in the wage earners bonds.