KARACHI: Remittances sent by overseas Pakistanis fell by almost 11 per cent during the first eight months of the current fiscal year.
However, the inflow depicted a month-on-month increase of 5pc in February after the government and the State Bank of Pakistan (SBP) uncapped the dollar exchange rate to its real market price to the current Rs280 from Rs230 in the last week of January.
The central bank on Friday reported that the remittances totalled $17.994 billion during July-February 2022-23 compared to $20.183bn in the same period of last year, recording a decline of 10.8pc.
The data revealed that the inflows rose 4.9pc to $1.988bn in February from $1.894bn in January. The improvement was a healthy sign but remittances dropped 9.4pc when compared with $2.196bn 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 uncapping of the exchange rate produced the expected result in the form of a sharp depreciation of the rupee but it changed the trend of inflows.
Inflows improve month-on-month to $2bn in February
The remittances were being sent through illegal channels due to lower dollar prices in interbank and open markets whereas the illegal grey market was offering Rs30 to Rs40 per dollar higher rates. In this background, the International Monetary Fund had asked the government to bring the exchange rate on a par with the one prevailing at the Pak-Afghan border.
The uncapping of the exchange rate has not only reduced the smuggling of dollars to Kabul but improved dollar supplies in the open market making it easier for importers to procure greenbacks on their own.
With the advent of Ramazan in the last week of this month, the currency market and banks expect higher inflows as overseas Pakistanis usually send 15 to 20pchigher remittances on account of charities, zakat and higher spending in the holy month.
The SBP data further revealed that inflows from almost all important destinations fell during 8MFY23 compared to the same period of last year, except the United States.
The highest inflow of remittances was from Saudi Arabia with $4.346bn but it showed a decline of 15.5pc compared to the same period last year.
The second highest inflows were from the United Arab Emirates with $3.197bn but it also noted a decline of 15.3pc compared to the last year.
The only increase of 3pc was noted from the US as it reached $1.972bn during 8MFY23 compared to the corresponding period last year.
Inflows from the UK dipped 5.7pc to $2.631bn, GCC countries 8.9pc to $2.119bn and EU countries 8.6pc to $2.035bn in 8MFY23.
Published in Dawn, March 11th, 2023