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Dhaka Tribune

Dollar transaction via cards tripled YoY, doubled since pre-pandemic

Due to not getting the greenback easily, travellers found it more convenient to use cards abroad

Update : 25 Nov 2022, 09:31 AM

Card-based foreign currency transactions spiked during times of market volatility and reached a record high in the first quarter (Q1) of FY23, when they totalled Tk1,546 crore.

This figure was only Tk464.9 crore between July through September, the same period as last year (FY22), demonstrating a year on year (YoY) increase in card-based foreign currency transactions of 332.54%.

This transaction amount was only Tk228.5 crore in FY21.

According to Dhaka Tribune's analysis, card transactions rose by almost twice as much in the first three months of the current fiscal year as compared to the year before the pandemic in 2019.

Card-based foreign exchange transactions totalled Tk774.8 crore in the first quarter of FY20. That indicates a growth of 199.54%.

However, bankers indicated that the surge in card-based foreign exchange transactions has also given them cause for concern because it is stressing the currency market.

The top brass of a private bank said that card transactions increased as a result of the related convenience and growing reliance on cards to carry cash for international travel.

According to market research and experts, even if the value of the dollar rose in the first two months of this fiscal year, card transactions remained unaffected. 

The central bank had also been encouraging virtual or card transactions at the time.

In September, Bangladesh Foreign Exchange Dealers' Association (BAFEDA) and the Association of Bankers Bangladesh (ABB) introduced major changes in foreign currency exchange rates on the cards.

On the 11th of that month, after the floating or uniform rates kicked off, the exchange rate came as a major shock for cardholders because the cost of dollars exchanged through cards has gone up. 

Earlier that decision, when the dollar rate on the card was Tk95, the maximum was Tk121 in the curb market and customers had to count up to Tk111 when buying cash dollars from the bank.

But due to the intense dollar crisis on the market, travellers were not getting the greenback easily, so they found it more convenient to use cards to pay in dollars abroad. 

Moreover, showing the poor dollar supply as a pretext, the exchanges sometimes charge high prices for travellers. 

On the other hand, Bangladesh Bank data analysis also shows even after that decision that transactions did not decrease even in September.

The foreign currency transactions through cards reached a record of Tk584.8 crore in September following Tk520.3 crore in August and Tk440.9 crore in July.

In the first three months of FY22, September, August and July this transaction amount was Tk184.6, Tk162.2 and Tk118.1 crore respectively. 

In FY22 and FY21, this was Tk184.6, Tk162.2, Tk118.1 crore and Tk90.6, Tk72.0 and Tk65.9 crore respectively. 

But if we look upon the FY20 or the pre pandemic year, then data analysis discloses that, in the months of September, August and July foreign currency transaction statistics by cards was Tk222.7, Tk287.3 and Tk264.8 crore respectively. 

However, the dual currency cards allow hotel booking abroad and purchases of a certain amount from home and a maximum of $12,000 can be spent through the cards a year, as per instructions of the central bank.

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