The flow of remittance is set to reach US $9.5 billion this year, providing “stronger cushion” to the external trade and stabilising the exchange rate, Bangladesh Bank (BB) Governor Dr Atiur Rahman said Saturday.

He said the central bank has undertaken substantial reforms to boost the annual flow through the banking channel, while putting a lid on the illegal money transfer.

“The increased flow will provide stronger cushion to the current account balance and exchange rate stability,” Dr. Rahman said.

His prediction came as expatriate Bangladeshis, mostly the working class, sent home an estimated US $ 9.0 billion last year, making it a vital source of foreign currency receipt.

Central bank officials say the monthly trend of foreign currency inflow is still robust, even as the demand for Bangladeshi workers has declined in recent months, thanks to the worst global recession in decades.

Remittances were only second to Bangladesh’s exports, while those surpassed the foreign aid and foreign investment combined.

The central bank chief noted that the priority of credit flows to the productive sectors will continue to sustain the confidence in production and trade.

“This will help the country minimise the impacts of the global recession,” he told a dialogue on trade finance in the city, organised by the Bangladesh chapter of International Chamber of Commerce (ICC).

The dialogue coincided with the release of 2009 survey on rethinking trade finance, conducted by the Paris-based global trade body.

Dr Rahman said that international trade is an engine of growth and development while financing of world commerce plays the “role of lubricant for that engine.”