Remittances declined for the fifth consecutive month in January, clocking in at $1.9 billion, data shared by the State Bank of Pakistan (SBP) showed on Monday.

This equates to a slump of 13.1 per cent compared to last January’s $2.2bn. On a month-on-month basis, remittances decreased by 9.8pc. In December, remittances amounted to $2.1bn.

The highest inflows were received from Saudi Arabia ($407.6 million), followed by the United Kingdom ($330.4m), the United Arab Emirates ($269.2m) and the United States ($213.9m).

Remittances from other Gulf countries — Bahrain, Kuwait, Qatar and Oman — amounted to $243.6m while $239.6m was received from European states.

The decline in remittances over the last few months has been largely attributed by experts to the artificially low dollar rate in the interbank market, which resulted in the emergence of a very strong black market that started attracting remittances.

After pressure from the International Monetary Fund, the government removed an unofficial cap on the PKR-USD exchange rate on Jan 26 in what experts termed a “much-needed adjustment”.

Following the cap’s removal, the gap between the official and black market rates began narrowing, which analysts believe would result in remittances flowing in through official channels once again.

Commenting on January’s figure, Ismail Iqbal Securities’ Head of Research Fahad Rauf said that while the dollar black market had impacted remittances, it was still “not a bad number, given the huge gap between the interbank and black markets”.

Rauf said remittances were expected to start improving from February.