Remittance, reserves and the taka: a plain-language explainer
Money sent home by Bangladeshis working abroad is one of the economy's main supports. Here is how it connects to the dollar rate and the prices you pay.
Millions of Bangladeshis work abroad, in the Gulf, Malaysia, Europe and beyond, and send part of their earnings home. These transfers — remittance — pay for school fees, homes and medicine for families. They also matter for the whole economy, because they bring in foreign currency.
Why foreign currency matters
Bangladesh buys many essentials from abroad: fuel, fertiliser, machinery, cotton for the garment industry, and some foods. Importers have to pay for these in foreign currency, mostly US dollars. The country earns dollars mainly through exports, such as garments, and through remittance.
What "reserves" are
The foreign exchange reserves held by Bangladesh Bank are the country's savings of foreign currency. Healthy reserves reassure importers, lenders and investors that the country can pay its bills. When reserves fall, the central bank has less room to steady the currency.
How this reaches your shopping bag
When dollars are scarce, the taka tends to weaken against the dollar. A weaker taka means imported goods — and things made with imported inputs — cost more in taka, which pushes up prices. Strong remittance and export earnings ease that pressure.
Why the channel matters
Money sent through banks and licensed services is counted in the official figures and adds to the country's reserves. Informal transfers, often called hundi, are illegal, carry the risk of losing the money, and do not strengthen the reserves. That is why authorities encourage workers to use formal channels.
Next time you hear that remittance rose or fell, you will know it is not just a number in a report — it is part of what decides the price of fuel, phones and food.