Bankers say travellers are now opting for card-based dollars due to a shortage of cash greenbacks
Foreign currency transactions through cards hit an all-time high in December 2023. Bankers say the surge happened as travellers are now opting for card-based dollars due to a shortage of cash greenbacks.
According to Bangladesh Bank data, foreign currency transaction through cards in December was Tk929 crore — registering a 45.29% year-on-year increase.
A senior official of Bangladesh Bank told The Business Standard, “There is currently a dollar crisis in our country. So no one can travel with cash dollars. They are forced to travel abroad with dollars on cards.”
The official went on to say, “This outflow further decreases dollar liquidity in our Nostro accounts. If the rate of dollar outflow exceeds the rate of inflow, the situation may worsen.”
He further said, “December is the travel season. People travel more during this period. So foreign exchange transactions through cards increase in December.”
The head of the treasury department of a private bank told TBS, “The increase in dollar transactions through cards is not good news at this moment. Because our dollar outflow is more than inflow.”
Moreover, travellers can get the dollars at a lower price if they take the greenback on cards, he said. “That’s why they are going for travel or medical treatment by endorsing dollars on cards. This is reducing our dollar reserves.”
He also said, “On the one hand, we are not getting the dollars needed to open letters of credit (LCs). On the other hand, the pressure from travellers is not at all pleasant.” If dollars come from abroad through proper channels, then the crisis could be handled, he said.
The treasury department official continued, “But the examples of bringing dollars to our country from abroad and spending them are very few. Moreover, the number of passengers and business visitors to our country has decreased altogether.”
Zahid Hussain, a former lead economist at the World Bank’s Dhaka office, said overcoming the dollar crisis is not possible unless a market-based system is introduced.
He, however, said the increase in card-based transactions is a sign of a country’s modernisation. “We are becoming more and more technologically conscious and modern. This saves time and reduces the risk of carrying money.”
Local currency transactions through card also rise
The central bank data shows ATM, POS, CRM and e-commerce transactions through cards rose by 16.45% month-on-month in December.
Overall, local and foreign currency transactions in December stood at Tk45,352 crore, which is 6.36% more than the previous month.
