The foreign exchange reserves have also started slipping from its peak of over $18 billion to below $17 billion indicating the shortage of greenback could be more serious in coming weeks and months. - File photo

KARACHI: The remittances continued to increase during the first five months of the current fiscal year but the growth moderately slowed compared to 23 per cent witnessed in the first four months (July-October) of 2011-12.

The State Bank reported on Tuesday that the overseas Pakistanis remitted $5.239 billion in the July–November period of this fiscal year against $4.428 billion the country received in the same period last year, showing a growth of 18.33 per cent.

The increasing remittances are crucial as the country is facing multiple pressures on its external account as dollar inflows from other sources are drying up.

The remittances from all countries showed growth during the period under review. The monthly average comes out to $1.048 billion for the July-November period as compared to $885 million in the same period last fiscal year.

In November 2011, an amount of $924 million was sent home by overseas Pakistanis, down 0.21 per cent, when compared with $926 million received in the same month last year.

Analysts said the 18 per cent improvement in remittances was encouraging but the moderate growth in remittances could be threatening for the external account.

The country's current account deficit widened to $1.555 billion during the first four months (July-October) of this fiscal year against $541 million deficit in the same period last year.

The mounting pressure was visible in the currency market as within a small span of 40 days the rupee had lost over 4 per cent against the US dollar.

The importers see more pressure on the external account as well as foreign exchange reserves and they have been buying dollars (forward booking) at Rs93 against the current price of Rs89.15.

The foreign exchange reserves have also started slipping from its peak of over $18 billion to below $17 billion indicating the shortage of greenback could be more serious in coming weeks and months.

Analysts in their reports have said the worsening of Pak-US relation has played a key role in putting pressure on the exchange rate and cannot be eased unless the relation becomes normal.