Dollar inflows thru banking channels jump

Published September 27, 2020
Inflows of foreign exchange through banking channels remained high in September which may increase the remittances up to $2 billion, said bankers and money changers. — AFP/File
Inflows of foreign exchange through banking channels remained high in September which may increase the remittances up to $2 billion, said bankers and money changers. — AFP/File

KARACHI: Inflows of foreign exchange through banking channels remained high in September which may increase the remittances up to $2 billion, said bankers and money changers.

Currency experts said the inflows of banking channels was high due to at least four reasons that forced the overseas Pakistanis to send their money only through banks.

“Closure of commercial flights compelled all the remitters to adopt banking channels to send their money,” said Forex Association of Pakistan President Malik Bostan, adding that it has also stopped currency smuggling.

He said that due to coronavirus, movement of Pakistanis living abroad has been curtailed which in turn has redirected inflows towards formal channels. “They used to bring thousands of dollars in their bags instead of sending them through the banking system,” he said.

While bankers are also witnessing higher inflows, they were reluctant to give any definite figure for the total value sent through banking channels in September.

“The passage of Financial Action Task Force bills from National Assembly and Senate has greatly reduced inflows through hundi and hawala. This foreign exchange is also coming through banking channels,” said a banker dealing with currencies in the interbank market.

Earlier, dealers in the open market had said that illegal money changers, who were in thousands across the country, disappeared from the trading business which helped banks receive higher inflows.

The country received increased remittances in the first two months of FY21. According to the State Bank of Pakistan Governor Reza Baqir in the monetary policy meeting on Monday, they came on the back of orderly exchange rate conditions as well as supportive steps taken by the government and SBP under the Pakistan Remittance Initiative.

Despite high remittances, the exchange rate did not improve in favour of the rupee. However, currency dealers and bankers maintained that due to rising inflows and continued current account surplus in FY21, the rupee-dollar parity remained almost stable.

“The current account surplus in July and August stabilised the exchange rate and will continue to help the country,” said Bostan, adding that exchange companies are depositing higher amount of dollars into the banks. The open markets are doing almost one-sided business as buyers make up just 10 per cent of the trading while the rests are sellers.

Dollar deposits by the exchange companies and extremely low buying of greenback from open markets has increased the foreign exchange reserves of commercial banks, which rose to an almost 12-month high at $7.202bn on September 18.

In September 2019, holdings of the commercial banks were $7.292bn.

Published in Dawn, September 27th, 2020

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

The whole truth
28 Sep, 2022

The whole truth

THE war on truth has never been more relentless than it is today. Authoritarianism is on the rise and purveyors of...
Real-world trolls
Updated 28 Sep, 2022

Real-world trolls

It's reprehensible how PTI supporters now seem convinced that politicians from opposing camps aren't entitled to basic dignity.
Islamabad wildlife
28 Sep, 2022

Islamabad wildlife

PRESERVING biodiversity is low on the list of priorities of both state and society. However, successful attempts at...
Noon leaks
Updated 27 Sep, 2022

Noon leaks

PMO audio leaks are a national security emergency that ought to be investigated at the highest level.
Cipher probe offer
27 Sep, 2022

Cipher probe offer

CONSIDERING the toxic political polarisation in the country, former prime minister Imran Khan’s suggestion that ...
Delaying Doha plans
27 Sep, 2022

Delaying Doha plans

WHEN Doha announced its intention to spend $3bn in different commercial and investment sectors of Pakistan around a...