Card-based Forex Transactions Increased 3 Times

Dhaka, Bangladesh – Forex or Foreign Exchange currency transactions via cards boost during the first quarter of the funding year 2022-2023.

Foreign exchange activities through cards tripled as an acute dollar shortage in the funding market of Dhaka. The shortage prompted travelers to utilize cards. The card-based Forex activities reached Tk 1,546 crore in the Financial Year 2023, from July to September, compared to 465 crores in the year 2022 under the same period. The report was as per Bangladesh Bank.

The Forex card transactions hit a record of Tk 584.8 crore in September, succeeding August’s Tk 520.3 crore and July’s Tk 440.9 crore. On the other hand, the increase in Forex activities through cards became a concern since it’s also adding pressure on the currency market, according to bankers.

In June and July of last year, the transactions via cards reached Tk 125.3 crore and Tk 118.1 crore, respectively. The transactions reached Tk 300 crore in May 2022 for the first time. According to bankers, people use foreign currency from credit and debit cards during overseas travels. Travelers need help getting the greenback because of the deep dollar problem in the trading market. Furthermore, the exchange houses charge high for overseas travelers, displaying the poor dollar supply as an excuse. So, bankers found it more convenient to utilize dollars abroad for expenditures. More people found it safer and easier to use cards than cash currency notes.

Travelers use their foreign currency in their credit or debit cards to pay travel costs, plane fares, shopping expenses, and hotel booking. According to the rules of Bangladesh Bank, every cardholder can spend a max of $12,000 yearly as a personal entitlement. The central bank advised travelers to use cards instead of looking for currency notes, equivalent to high prices. The country is battling the dollar problem because of a record increase in trade shortfall and lower transfer inflow. The trade deficit of Bangladesh hit $33.25 billion, which is a historic high, in the funding year 2021 to 2022, despite the surge in commodity prices and imports on the international market.

The import payments boosted to $19.34 billion from July to September, higher than the $17.32 billion in the previous year. The Forex reserve in the country decreased to $34.30 billion since the central bank boosted dollar sales to fight the greenback problem on the trading market.

As per IMF or International Monetary Fund, the reserve is at $26.3 billion, which has been lowered in the past seven years if it uses $8 billion for export development funds.

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