Bangladesh’s Economy Grapples with US Dollar Crisis

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Bangladesh’s Economy Grapples with US Dollar Crisis

Due to the crisis of the US dollar in the country, the Central Bank’s foreign currency reserves have been declining. The official rate of the US dollar has been set at Tk 117, a rise of Tk 7 in the past month by the Central Bank, exacerbating import costs and increasing pressure on the people.

However, the appreciation of the dollar has led to an increase in remittances or earnings from expatriates. In May alone, a total of 22.5 billion dollars came through banking channels, the highest in nearly four years, surpassing the previous high of 26 billion dollars in remittances in July 2020.

It is learned that banks are now purchasing expatriate earnings from foreign exchange houses at rates ranging from Tk 118 to Tk 30. Meanwhile, due to the appreciation of the dollar, the cost of importing goods is increasing. With inflation running at nearly 10 percent in the country, the increase in import expenses is expected to further burden the people.

According to information from the Bangladesh Bank, in the first 11 months of the fiscal year 2023-24, expatriate earnings amounted to 21.37 billion dollars, which is 196 crore dollars more than the same period of the previous fiscal year. In April, expatriates sent 20.4 billion dollars through banking channels, compared to 16.9 billion dollars in the same month of the previous year. Usually, expatriate earnings increase before Eid every year.

Due to the decrease in foreign currency reserves at the Central Bank, it stood at 18.72 billion dollars on May 29. In April, the reserve was 19.96 billion dollars, which was 21.87 billion dollars at the end of December. The reserve reached a record high of 48 billion dollars in August 2021 in the country’s history. Besides taking various measures to control imports, the Bangladesh Bank is also selling a significant amount of dollars from the reserve.

Bankers believe that to increase remittances through banking channels, strict measures need to be taken against money laundering and hundi operations. Otherwise, simply raising the price of the dollar will increase import expenses, putting further pressure on the common people. Additionally, there needs to be initiatives to timely bring in remittance earnings into the country.

Yasir Monon
Yasir Monon
Online Editor, Business Mirror

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