US overtakes UAE as top remittance source

The United States has surprisingly become the top source country for remittances sent by Bangladeshi expatriates through banking channels as remittances from that country increased in September and October this year after declining for two consecutive months.

Experts attributed this increase to the government’s various initiatives aimed at attracting more expatriate incomes through legal channels and stabilising the foreign exchange market for remitters.

According to the Bangladesh Bank data, in the first four months (July-October) of FY25, expatriates sent $8,937 million to the country in total. Out of that amount, $1,418 million remittance came from the US, which was the highest.

In the first two months of the current fiscal year, the United Arab Emirates was the highest source of remittances, with $333 million and $338 million sent from there in July and August, respectively. Meanwhile, expatriates in the US sent $239 million in July and $293 million in August.

However, from September, remittances from the US began to increase, and this trend continued in October. In September and October, $388 million and $498 million remittances came from that country, respectively.

Expatriates sent $361 million in September and $334 million in October from the UAE.

The reason for the increase in remittances from the US is attributed to several factors by the officials involved in remittance collection at various banks.

The use of informal money transfer channels, or "hundi," is less common in the US, which means most of the remittances sent from the country are routed through legal channels. One major reason for the increase in the expatriate earnings from the country could be the reduction of the US policy interest rate by 0.50 percentage points on 19 September. In contrast, interest rates have been rising in Bangladesh.

Additionally, policies regarding foreign currency savings have been made more flexible, which could also be encouraging more remittances to flow from the US to Bangladesh.

Former lead economist at the World Bank’s Dhaka office Zahid Hussain told the Daily Sun that the overall rise in remittances may have stemmed from increased transactions through legal channels.

“Compared to Bangladeshis in the Middle Eastern countries, expatriates in the US are generally in relatively better professional positions. As a result, their earnings are higher, which allows them to send more money back home. Money sent by them is also invested in bonds,” he said.

Bangladesh Bank Spokesperson and Executive Director Husne Ara Shikha said, “Not only remittances are coming from the US, investments are coming from that country too. Foreign direct investment is good for our country. The investment ceiling for wage earners development bonds for those living in the US has been revised, increasing their interest in investing here. There is no reason to view this with suspicion.”

Recently, the government has removed the upper limit on investments in wage earner development bonds, allowing non-resident Bangladeshis to invest any amount of money in these bonds.

On condition of anonymity, a managing director of a bank told the Daily Sun that most of the Bangladeshi expatriates in the US are students, and their primary income isn't typically sent home. Instead, in the last few years, a significant amount of both legal and illegal money has been flowing out of the US. Many individuals are now bringing this money back into the country through legal channels.

According to the Bangladesh Bank data, since the country's independence, Bangladeshis in Saudi Arabia typically sent the highest amount of remittances. Until recently, the UAE ranked second in this respect. However, following the outbreak of the Covid-19 in March 2020, remittance inflows from the US have surged the most, allowing it to surpass the UAE and become the second-largest source of remittances. This positive trend still continues.

In the fiscal year 2023-24, remittances from the UAE were higher than those from the US throughout the year. During this period, remittances from the UAE amounted to $4.64 billion, while remittances from the US stood at $2.96 billion.

The US was the second-largest remittance source for Bangladesh in FY21, FY22, and FY23 consecutively, the central bank data shows. Remittance inflow from there was $2.4 billion in FY20. It then rose to $3.46 billion in FY21, $3.44 billion in FY22, and $3.52 billion in FY23.

Remitters now get extra incentives of up to 2.5% from banks in addition to the 2.5% offered by the government as banks have increased their efforts to attract expatriate incomes amid the foreign exchange crisis.

According to the central bank data, the top 10 remittance sources in the first four months of the current fiscal year were the US, the UAE, Saudi Arabia, the UK, Oman, Malaysia, Kuwait, Italy, Qatar, and Bahrain.

During this period, expatriates sent $1,365 million from the UAE, $1,176 million from Saudi Arabia, and $763 million from the UK.

According to the Ministry of Expatriates' Welfare and Overseas Employment, around 1.20 crore Bangladeshis are currently living abroad, with a large portion working in labour-intensive jobs in the Middle Eastern countries.