Foreign currency transactions hit a record high

Card-based foreign currency transactions hit a record high of Tk 356 crore in May due to an increase in the number of travelers going abroad.

This is a massive 233% year-over-year increase.

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In April 2022, transactions amounted to Tk 241 crore, Bangladesh Bank data showed.

Bankers say the large amount of card money transactions have added to the continued pressure on the country’s foreign exchange reserve.

Md Mahiul Islam, head of retail banking at Brac Bank, said a large number of people traveled abroad in May during the Eid-ul-Fitr holiday, which significantly increased the currency transactions.

Flight fares have also increased significantly over this period, he said. Travelers had also purchased a good number of products on their trips, which led to increased spending on greenbacks, he said.

People were forced not to travel abroad during the height of the coronavirus pandemic, which is why there was a surge in travelers in May, he said.

Although the taka has depreciated significantly against its exchange rate against the dollar in recent times, spending on cards has yet to decline, he said.

He said, however, that card transactions could decrease in the coming days.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, echoed him.

Many people went abroad for treatment in May, which also increased card-based currency transactions, he said.

HM Mostafizur Rahman, head of retail banking at Dhaka Bank, said the number of people traveling abroad had recently started to decline due to efforts by both the government and the Bangladesh Bank.

The government and the central bank have recently imposed restrictions on their employees traveling abroad to reduce spending in dollars.

A BB official said the country’s foreign exchange reserves were now under pressure due to rising import payments and falling remittances.

Increased spending via cards also played a role in heightening the pressure, he said.

Import payments amounted to $82.49 billion in FY22, up 36% year-on-year, while remittance amount fell 15% to 21.03 billions of dollars.

Against this backdrop, reserves stood at $39.66 billion as of August 3, compared to $46.15 billion as of December 30 last year.

Also, the taka exchange rate on the interbank platform rose to Tk 94.70 for every dollar on August 4 from Tk 84.80 a year ago.