February remittance crosses $3b

Bangladesh recorded its highest remittance inflow for any February in at least seven years last month, as expatriates sent home more money ahead of Eid-ul-Fitr, one of the largest festivals for Muslims.

According to central bank data released yesterday, expatriates remitted $3.02 billion in February, up 19.4 percent from $2.53 billion in the same month a year earlier.

Industry insiders note that inflows typically rise ahead of Eid, as remitters tend to send larger amounts during Ramadan for families to celebrate the festival.

The strong February figure is also part of a broader upward trend. Between July and February of the current fiscal year, total remittance inflow reached $22.45 billion, reflecting 21.4 percent year-on-year growth.

However, experts warn that conflicts in the Middle East could weigh on inflows in the months ahead.

Bankers say the sustained rise in remittances is helping ease pressure on Bangladesh’s balance of payments and stabilise the foreign exchange market.

They said government incentives, banks’ efforts to channel funds through formal routes, and the decline of the hundi system -- an illegal but once-popular cross-border transfer mechanism – have all contributed to the increase, particularly following the political changeover in August 2024.

The rising inflows have helped push up foreign exchange reserves. Gross reserves stood at $35.11 billion as of February 26, up from $26.26 billion a year earlier, according to Bangladesh Bank data. Under the International Monetary Fund’s BPM6 calculation method, reserves reached $30.36 billion, compared to $21.08 billion in the same period last year.

Besides, the central bank has purchased $5.38 billion from the foreign exchange market so far in the ongoing fiscal year to manage liquidity and build up reserves

Mohammed Nurul Amin, former chairman of the Association of Bankers Bangladesh (ABB), told The Daily Star that remittances have been a key driver behind the recent increase in reserves, indicating improved performance of the external sector.

The former senior banker, however, cautioned that the outlook is uncertain as conflicts grip the Middle East.

“Iran’s top leader has been assassinated. If the war situation prolongs, factories in Middle Eastern countries may remain closed and salaries could decline, leading to various negative impacts overall, which may also affect remittance inflows,” he said.

However, if the conflict does not last long, the impact is unlikely to be significant, he said, adding that Bangladesh receives the major portion of its remittances from Middle Eastern countries.