Unrelenting outflow of the US dollars through travel ploys put an extra pressure on Bangladesh’s depleting foreign-currency reserves, officials and market analysts say, as crisis-time restraint goes unheeded.
They say the uptrend in using the American greenback outside the forex-strapped country goes on as the volume of overseas travels by Bangladeshi citizens on different purposes keep rising in recent months.
Even a year ago, outbound people mostly used to take the bullish American currency in cash with them before travelling to other countries. But things have changed amid persisting forex dearth–now majority of them use credit card and meet their overseas payment obligations.
According to statistics of Bangladesh Bank (BB), the monthly average of cash dollar outflows due to overseas travel was US$ 8.66 million from January to June 2023. But it rose to $14.50 million during the last four months to October.
In terms of credit-card usages outside, the average monthly dollar spending was recorded at $57.75 million from January to June this calendar year. The dollar spending using credit card by outbound Bangladeshi people rose to $68.50 million per month in July-October period in 2023.
Seeking anonymity, a BB official said the flow of overseas travels by Bangladeshi people continued burgeoning in recent months, which increases the volumes of forex outflow in the current macroeconomic context.
The official said the maximum annual ceiling of using dollars outside now is $12,000, which was revised up twice from $5000 in recent years considering demand of the travelers.
“As the country’s falling foreign-currencies’ reserves are under pressure amid forex dearth, the authorities concerned should check necessities of the travels to save the forex,” the central banker said.
Spokesperson for BB Md. Mezbaul Haque says people’s foreign travels had been severely affected for more than two years since early 2020 when the Covid-19 hit the steadily growing economy. But, after middle of 2022, the overseas trips started getting the momentum.
As people’s lifestyle continues improving and the travel restrictions are being completely lifted, the volume of travels keeps increasing, he said.
“As getting required amount of dollars is tougher, people are now relying more on using credit cards,” he added.
Managing Director and CEO of Mutual Trust Bank Ltd (MTB) Syed Mahbubur Rahman said they were not allowing people to get dollars in cash on travel purposes from their bank.
“We’re giving dollars considering creditworthiness of our credit-cardholders. For example, if the credit-cardholder has a creditworthiness of Tk 0.5 million, the client will get dollars equivalent to Tk 0.5 million,” he said.
If anyone requires more dollars than that of the creditworthiness, he or she will have to deposit additional credit with the bank, the experienced banker said.
Chairman of Policy Exchange of Bangladesh Dr M. Masrur Reaz says the US dollar spent on travel purposes is not a big amount and it is insignificantly to influence overall the country’s balance-of-payments (BoP) directives.
The summer season in most of the western countries basically started in July. So, people having the financial capacity chose this time to travel while student admission in many universities and colleges globally started from August onwards.
“These are probably the major reasons behind the rise in dollar outflow due to overseas travels,” he adds.
According to traditional counting method of the central bank, the country’s gross forex-reserve volume stood at $25.24 billion as on November 19, 2023.
However, the IMF-prescribed forex arithmetic puts it below $20-billioin mark.