On September 2022 the foreign currency transactions through cards saw an all-time high of BDT 584 crore, which is an 217% increase from the BDT 184 crore spent on September 2021.
Below, we have outlined the trend in foreign currency spending via card throughout 2022.
As per the data, international card payments have increased every month, with the only exceptions being January 21 and April 22, where the spending amount fell. According to bankers, the number of foreign trips, cheaper dollar rates than the open market, making small import payments through cards, and rising global inflation are the predominant factors.
In recent times, it has been getting exceedingly tough for travelers to purchase dollars in the open market. Moreover, exchange houses are using the dollar shortage as an excuse to charge high rates to travelers. That is why more and more people are opting to use their cards to make purchases during their visits abroad.
However, this increase in international transactions is putting pressure on the foreign exchange. Bangladesh has been struggling with the dollar crisis due to a record-high trade deficit of $33.25 billion in FY 2021-22. In addition, low remittance inflow and an ongoing global recession have caused the forex reserve to fall by more than 21%, which stood at $34.2 billion on September 21.
In response, both the government and central bank have been discouraging government employees from taking any unnecessary trips out of the country. But this had little to no effect on the rich and middle-class people as they have been making frequent foreign trips, especially after the pandemic restrictions were lifted.
As per the regulations set by the central bank, travelers are allowed to carry and spend a maximum of $12,000 abroad. But after endorsing the dollars to the card, travelers are encashing the greenback and selling them on the kerb market for at least BDT 5 more for each dollar bill. As a result, officials are now considering lowering the dollar spending limit except for medical and educational purposes.
The situation is also quite dire for small traders as the inflated prices of commodities and the lack of priority given by banks for opening small-amount LCs have led them to also use their own cards to purchase products online.