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Bangladesh’s foreign exchange (forex) market remained volatile as money exchanges traded remittance rates between Tk123 and Tk124 per dollar on Tuesday, higher than the official rate of Tk110.50.
This is the highest remittance rate recorded since October 22.
Most of the banks did not purchase remittances on Tuesday as the gap between remittance and import rates widened to Tk13 per dollar when the dollar selling rate for importers was set at a maximum of Tk111 by the Association of Bankers Bangladesh (ABB).
The remittance rate, which stood at Tk120 last month, has experienced an upward trend since the beginning of the current month.
Before October 22, remitters received a maximum incentive of 5%, comprising a 2.5% government incentive and a 2.5% incentive funded by banks themselves.
Subsequently, the ABB abolished the 2.5% cap on incentives that banks could offer for remittance income.
This implies that banks now have the autonomy to determine their own incentive rates for remittances.
However, each bank’s board of directors must approve the proposed incentive rate before implementation.
The ABB mandated that all foreign currency inflows be purchased at a fixed exchange rate of Tk110.50, applicable to both remitters and exporters.
This change was expected to enhance the competitiveness of remittance rates offered by banks, potentially incentivizing more individuals to remit funds through formal banking channels.
After lifting the incentive limit, some banks approved their highest incentive limit of 2.5% in the board, which means they will provide a maximum 5% incentive, including the government offer.
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