KARACHI: Remittances sent by overseas Pakistanis fell by nearly 11 percent during the first eight months of the current fiscal year.
However, the supply showed a monthly increase of 5 per cent. in February after the government and the State Bank of Pakistan (SBP) capped the dollar exchange rate at its real market rate at the current Rs280 from Rs230 in the last week of January. .
The central bank reported on Friday that remittances stood at $17.994 billion during July-February 2022-23 compared to $20.183 billion in the same period last year, registering a 10.8 percent decline.
The data revealed that the approach increased by 4.9 per cent. to $1.988 billion. in February from $1.894 billion. in January. The improvement was a healthy sign, but remittances fell by 9.4 per cent. compared to 2.196 billion USD in the same month last year.
However, the increase in remittances in February was expected by the market due to very high dollar prices. The abolition of the exchange rate produced the expected result in the form of a sharp depreciation of the rupee, but it changed the trend of the approach.
Inflows improve month-on-month to $2 billion. In february
The transfers were sent through illegal channels due to lower dollar rates in interbank and open markets, while the illegal gray market offered Rs30 to Rs40 per dollar higher rates. Against this background, the International Monetary Fund had asked the government to bring the exchange rate at the level of that prevailing at the Pak-Afghan border.
The abolition of the exchange rate has not only reduced the smuggling of dollars into Kabul, but also improved the supply of dollars in the open market, making it easier for importers to obtain dollars on their own.
With the advent of Ramazan in the last week of this month, the foreign exchange market and banks are expecting higher inflows as overseas Pakistanis usually send 15 to 20 per cent. higher remittances due to charity, zakat and higher spending during the holy month.
The SBP data further revealed that inflows from almost all major destinations fell during 8MFY23 compared to the same period last year, except the US.
The highest inflow of remittances was from Saudi Arabia at $4.346 billion, but it showed a decrease of 15.5 percent. compared to the same period last year.
The second highest inflow was from the United Arab Emirates with 3.197 billion. USD, but it also recorded a decrease of 15.3 per cent. compared to last year.
The only increase of 3 per cent. was quoted from the USA when it reached 1.972 billion. USD during 8MFY23 compared to the corresponding period last year.
The inflow from Great Britain fell by 5.7 per cent. to 2.631 billion USD, the GCC countries 8.9 per cent. to 2.119 billion USD and the EU countries with 8.6 per cent. to 2.035 billion USD in 8MFY23.
Published in Dawn, March 11, 2023