• Banks receive 30pc fewer dollars in 1HFY26
• Untraceable outflows raise questions over currency flows

KARACHI: Banks received 30 per cent fewer US dollars from exchange companies in the first half of the current fiscal year, according to official data.

Exchange companies sold about $1.4 billion to banks during July-December FY26, compared with around $2bn in the corresponding period of FY25, reflecting a decline of nearly 30pc.

Exchange companies are required to sell surplus foreign currency in the banking market. However, they are also allowed to sell dollars to individuals for specific purposes.

“The customers bought about $1.2bn in six months from exchange companies, kept $400m in bank accounts and the remaining $800m is not traceable,” said Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP).

The untraceable $800m is believed to have been used for purchasing virtual currencies. Trading in virtual currencies remains unregulated in Pakistan, though the State Bank is working on a framework to regulate cryptocurrency transactions.

The government has expressed support for cryptocurrency trading and is willing to legalise it with the assistance of the State Bank. Selling dollars to the general public is not straightforward, as exchange companies typically issue cheques for encashment through banks or directly transfer dollars into buyers’ bank accounts instead of providing cash.

Data show that currency sales to banks have been on a declining trend from June to December 2025. The highest inflow was recorded in June, when banks received $408m.

At the start of FY26, sales stood at $279m in July, falling sharply to $163m in August. They recovered to $187m in September, rose to $243m in October, dipped slightly to $238m in November and increased again to $271m in December.

Despite rising remittance inflows this year, dollar sales by exchange companies to banks have declined.

“Special apps available on websites are attracting dollars from Pakistan. The current US dollar rate offered by these apps is around Rs292, which is highly attractive for dollar holders,” Mr Bostan said, adding that these platforms guide holders either to sell at these rates or invest in cryptocurrencies.

Exchange rate outlook

“The latest liquidity profile of the SBP shows aggregate short positions of less than $2bn, broadly in line with the IMF’s target, and suggests that reserve accumulation has not been driven by buy-sell swaps but by mopping up excess liquidity from the interbank market,” said Faisal Mamsa, CEO of Tresmark.

The current trajectory implies a potential breach of the Rs280 to a US dollar; however, with the real effective exchange rate at 104.8, competitiveness already appears stretched. In this context, the central bank should resist a decisive break below Rs280, preferring stability over signalling strength, particularly as import demand gradually recovers and longer-dated external pressures remain unresolved, he said.

“For now, the dollar-rupee parity is likely to remain range-bound, with two-way movement increasingly coming into play,” he added.

Published in Dawn, January 11th, 2026