KARACHI: With $2 billion sold to banks and another $2 billion on the open market, remittances via exchange companies remained strong during the first half of the current fiscal year (FY25).
By the end of FY25, Pakistan is expected to receive $35 billion in total remittances through banks; inflows have already increased by 33% in the first half of this year compared to the same period last year.
Bankers claim that the increase in remittances has been largely attributed to a stable exchange rate and a government crackdown on illicit currency trading. After the 2023 crackdown, the open market—which had previously been as a hub for illicit currency transactions—saw significant improvement, which benefited banks and exchange companies alike.
According to Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), “the situation has improved as we have sold $2 billion to banks in the first half of the current fiscal year and expect the same amount in the next half.”
According to him, there was no discernible lack of dollars during that time because exchange companies also sold $2 billion on the open market. Approximately $800 million of these monies were set aside for Haj expenses, in addition to other significant costs like travel, education, immigration, and medical requirements.
“If the State Bank offers exchange companies the same incentives given to banks, the inflows would increase even more,” Mr. Paracha stated. At the moment, exchange companies receive Rs1 every dollar in remittances, whereas banks earn Rs2 per dollar. “We are optimistic about attaining parity in incentives and are in talks with the government,” he continued.
Remittances from Pakistanis living abroad continue to be the main source of foreign exchange revenues for the nation. Even though exports have somewhat increased this year, they are still expected to fall well short of remittances.
Remittances made through banks totaled $30.25 billion in FY24, of which $3.8 billion came from exchange businesses. Increased trust in the official financial system is shown in the continuous increase in remittances, which is partially attributable to the campaign against illicit currency trading.
