Migrant Workers and Their Role in Bangladesh’s Forex Stability

Over the past few decades, migrant workers—commonly referred to as Overseas Bangladeshi Workers (OBWs)—have played a pivotal role in not only uplifting their families back home but also in ensuring macroeconomic stability for Bangladesh. As one of the top remittance-receiving countries in the world, Bangladesh has benefited tremendously from the hard-earned foreign currency sent by its citizens working abroad.

In 2023 alone, remittances contributed over $21.6 billion to the country’s foreign exchange reserves, acting as a crucial buffer for economic shocks and trade imbalances. But the story is more than just numbers. These workers are at the heart of Bangladesh’s journey toward sustainable growth and foreign currency stability.

The Economic Backbone of Remittances

Migrant workers, primarily based in the Middle East, Southeast Asia, and Europe, work across various sectors—construction, domestic services, healthcare, shipping, and agriculture. Their remittances serve as a lifeline for millions of households, boosting domestic consumption and improving living standards.

Key economic contributions:

• Stabilizing the Bangladesh Taka (BDT) against major foreign currencies.

• Helping maintain forex reserves, especially during trade deficits.

• Supporting local economies through spending and investment.

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Remittance and Forex Stability: What’s the Link?

1. Strengthening Reserves

Bangladesh’s import-dependent economy requires strong reserves to finance the purchase of oil, machinery, and raw materials. With export earnings occasionally fluctuating, remittance flows act as a steady source of foreign currency.

For example:

• In times of global economic slowdown or falling exports (such as during COVID-19), remittances kept the forex reserve stable.

• Even when exports declined in 2020, Bangladesh managed to increase reserves due to robust remittance inflows.

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2. Controlling Currency Depreciation

By increasing the supply of dollars in the financial system, remittances reduce pressure on the exchange rate. This prevents extreme depreciation of the Bangladeshi Taka (BDT), helping stabilize prices for imported goods.

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Social Impact of Migrant Remittances

Beyond macroeconomics, the impact of remittances is felt at the grassroots level. These funds contribute to:

• Improved access to education and healthcare.

• Rural infrastructure development (housing, sanitation).

• Entrepreneurship and small business funding.

According to Bangladesh Bank data, remittance-recipient families spend over 70% of their funds on consumption and education, directly contributing to human capital development.

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Challenges Faced by Migrant Workers

Despite their critical role, Bangladeshi migrant workers often face:

• High recruitment costs.

• Lack of proper training before departure.

• Limited access to legal aid in host countries.

• Vulnerability to exploitation and wage theft.

These challenges not only hurt individual workers but also threaten the sustainability of remittance flows.

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Government and Policy Support

To strengthen the role of migrant workers, the Government of Bangladesh has introduced various initiatives:

• Overseas Employment Policy to ensure ethical recruitment.

• Establishment of Probashi Kallyan Bank (PKB) to support migrant financing.

• Launch of Skill Development Programs for outbound workers.

Additionally, digital platforms like Remit2Home, bKash, and Nagad are enabling faster and more transparent remittance transfers, boosting formal inflows.

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Why Formal Channels Matter

Informal remittance channels (like hundi) bypass the banking system, depriving the country of valuable foreign reserves. Encouraging the use of formal channels:

• Enhances foreign exchange accounting.

• Helps the government offer better financial products to migrants.

• Builds credit history for both sender and receiver.

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Diversification of Destination Countries

Bangladesh has been historically reliant on the Gulf Cooperation Council (GCC) states. However, to reduce vulnerability, the government is now looking to:

• Expand labor markets to countries like Japan, South Korea, and Germany.

• Send skilled workers in healthcare, IT, and maritime sectors.

• Collaborate with international bodies for safe migration standards.

The Road Ahead: Ensuring Sustainability

To sustain remittance-driven forex stability, Bangladesh needs to:

• Improve training and certification for outbound workers.

• Digitize migration management and reduce fraud.

• Offer incentives for formal remittance use (like cash-back or lower transfer fees).

• Encourage returnee migrants to invest in productive sectors like agriculture, SMEs, and green energy.

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Conclusion

Migrant workers are more than just economic contributors—they are nation-builders. Their remittances keep Bangladesh’s forex reserves stable, help offset trade deficits, and contribute to domestic development. To honor and sustain this contribution, Bangladesh must invest in a safe, efficient, and ethical migration ecosystem.

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