- Currently Tk169,586 crore excess liquidity in banks
- $659 million remittance came through banking channels in first 10 days of November
- This was $641 million during the same period of the last year
- Remittance earnings saw 2.8% YoY growth
- LCs worth $1.26 billion opened in the first 10 days of November
- It was $1.23 billion in the same period in October
There was excess liquidity in banks and also no bar in opening letters of credit (LC) for commercial importers, the Bangladesh Bank reiterated on Monday.
They were also hopeful that foreign currency supply and remittance inflow will see a balanced condition by January or February next year.
“There have been news in a few media reports and on social media that opening of LCs had been suspended, this is far beyond the truth, it is unfortunate. There is no restriction whatsoever. Banks are facilitating LCs based on usable remittances they have. LCs worth $1.26 billion were opened in the first 10 days of November," central bank spokesperson Abul Kalam Azad informed in a briefing on Monday.
When the global situation becomes vulnerable, such rumours begin to spread, he also said.
Addressing such rumours, Zahid Hussain, lead economist consultant for World Bank, told Dhaka Tribune: “Bangladesh Bank is changing the policy so many times that people are losing confidence. As a result, there is an opportunity to spread rumours.
“Bangladesh Bank needs to stabilize the economy by analyzing economic data. Suppose, now they are saying that the remittance problem will be resolved in January-February, whereas last June-July they were talking about two months. Such shifting in policymaking and lack of information are fueling rumours.”
“Overseas workers may get confused because of multiple exchange rates. Apart from this, exchanges may lose interest in dollar purchases by first fixing it at Tk108 and then Tk107.5. In that case, there is no reason for expatriates to go to the central bank's rate of Tk99 to spend their hard-earned dollars. So remittance senders may now be looking for other ways,” he added.
However, the Bangladesh Bank is also saying that they are providing dollar support in payment of government LCs opened for import in priority sectors and essential commodities (fuel, fertilizer and food) to maintain economic stability by keeping the country's energy and food security intact.
Remittance earnings saw a 2.8% year-on-year growth as the country received $659 million from expat Bangladeshis as of 10 November this year compared to $641 million during the same period last year, according to a Bangladesh Bank notice.
Regarding remittance growth, Hussain said: “I myself am puzzled while looking for the exact reason for the sudden drops in remittances, because until the end of August, about 800,000 workers had gone out of the country, which was 617,000 earlier."
"Neither their salaries have decreased in the countries they have gone to, nor is it that the cost of living has risen so much in those countries, adding too many inflationary pressures. I think moving away from different exchange rates will boost remittances through banking channels,” the former chief economist at the World Bank's Dhaka office explained.
According to data from the Bangladesh Bank, expatriate Bangladeshis sent $1.52 billion home in October, which decreased 7.4% from the same month last year and 1% from September.
Data analysis also shows that the first four months of the current fiscal year witnessed a 2.03% year-over-year decline in remittances, falling to $7.19 billion.