KARACHI: Foreign exchange companies sold $646 million to banks during the first quarter of FY26, down from $750m in the same period last year, reflecting lower availability of physical dollars and reduced inflows from visiting overseas Pakistanis.

According to the Exchange Companies Association of Pakistan (ECAP), the decline is linked to reduced remittances and delays in dollar payments from banks to exchange firms. “We have sold $646m in the banking market during the first three months of FY26. Though lower than last year, the figure is not discouraging,” said ECAP Chairman Malik Bostan.

Monthly data shows a consistent drop in dollar sales. Exchange companies sold $290m in July, which fell to $170m in August before slightly recovering to $186m in September. In contrast, sales during July-Sept FY25 stood at $333m, $294m, and $213m, respectively.

Market sources said physical dollars are scarce, with exchange companies increasingly issuing dollar-denominated cheques, which can be deposited in foreign currency accounts. Dealers attributed the shortage partly to banks delaying payments to exchange companies, making it harder to access physical cash from the open market.

Forex firms sold $646m to banks in Q1FY26, down from $750m

Currency experts believe remittance growth this year is weaker than in FY25. They cite concerns over a “managed” exchange rate, suggesting some inflows may be diverted away from official banking channels. Despite the rupee’s appreciation over the past two months, market participants argue the current rate may not reflect true market parity.

Bostan said remittance inflows remain satisfactory and expressed optimism about achieving the FY26 target. The government received $38bn in remittances in FY25 and has set a target of $40bn for the current fiscal year. Currency analysts believe maintaining FY25’s inflow level would support exchange rate stability.

Some encouragement is also drawn from improved diplomatic and economic engagement with Saudi Arabia, with hopes that new investments could strengthen Pakistan’s external position.

Published in Dawn, October 9th, 2025