A file photo shows a man counting US dollar notes at a currency exchange house in the capital Dhaka. The volume of foreign currency transactions made through cards declined slightly in November 2023 compared with that in the previous month. — New Age photo
The volume of foreign currency transactions made through cards declined slightly in November 2023 compared with that in the previous month.
Bangladesh Bank data showed that the amount of card-based foreign currency transactions decreased to Tk 798 crore from Tk 812 crore in October 2023.
After record amount of transactions in the previous months, foreign currency using cards declined slightly in November.
Bankers noted that while the volume of foreign currency transactions did not increase significantly, the prices in local currency showed an uptick due to the devaluation of the local currency.
The interbank rate of the dollar rose to Tk 110 from Tk 94.7 in July 2022 and Tk 84.8 in July 2021. In July 2022, forex transactions through cards amounted to Tk 441 crore, while in July 2021, it was Tk 118 crore.
They said that the foreign exchange transactions by cards depended on availability of dollars and the number of travellers going abroad.
Due to a considerable devaluation of the local currency, banks were hesitant to allow travelers to use foreign currency at lower rates, bankers said.
They further said that the banks were adjusting the rates in foreign currency accounts, potentially resulting in travelers obtaining available foreign currencies at higher prices.
The card-based foreign currency transactions started rebounding after July 2021 with relaxation of travel restrictions and the amount crossed Tk 250 crore in December 2021.
The monthly average transaction volume through cards is now over Tk 600 crore for a year from about Tk 200 crore a year before.
The use of cards for foreign currency transactions has got another boost since May 2022, as travellers found it more convenient to use cards abroad due to a shortage of dollars on the country’s financial market.
Foreign currency transactions using cards have experienced significant growth in the current financial year, as it has become much easier for travellers to obtain foreign currency through cards from banks, bankers said.
In addition, more and more people have found it safe and easy to use cards rather than bear cash currency notes, they said.
Travellers use their foreign currency in their cards mostly for payment of plane fares, travel costs, hotel booking and to bear shopping expenses, among others, they said.
Under Bangladesh Bank rules, each cardholder can spend up to $12,000 a year as their personal entitlement.
However, the rise in foreign currency transactions was also putting pressure on the currency market, bankers said.
The country’s foreign exchange reserves, as per International Monetary Fund guidelines, came down below $20 billion on January 31.
Continued sales of the foreign currency to settle import payment obligations reduced the foreign reserves of the country.
The BB injected more than $8 billion in the financial system from July to December in 2023 in order to facilitate banks in making import payment obligations.
Despite significant dollar sales by the BB, banks are still facing the crisis due to huge import payments.
New Age
