Due to the global economic recession and growing currency rate gap, investments have dropped to $2.2 billion.
KARACHI: Due to a growing currency rate gap in the open and interbank market and a worldwide downturn, remittances sent home by Pakistanis working abroad decreased by more than 9% month-over-month to $2.2 billion in October.
The State Bank of Pakistan (SBP) said on Friday that remittance inflows had dropped to $1.92 billion from $2.62 billion during the same period of the previous fiscal year.
However, in the first four months of the current fiscal year 2022-23 (July-October), remittances fell by 9% year-over-year, to $9.9 billion.
In an interview with The News, the head of research at the Pakistan-Kuwait Investment Company, Samiullah Tariq, listed the following three primary factors as the cause of a fall in inflows:
- Rise in global interest rates diverting dollars
- Higher inflation reduces disposable income
- The gap between official and unofficial exchange rates has
Smuggling and increased prices given via informal and illegal channels were also cited by analysts as contributing factors to the reduction, making it the second straight drop to be linked to these factors.
It is important to take into account that throughout the course of this month, the difference in dollar rate that exists between the official and informal markets expanded. As a direct consequence of this, a significant portion of remittances had been transferred to the black market via the use of hundi and hawala.
In spite of the fact that the value of the rupee remained unchanged on the interbank market over the previous month, there was a scarcity of dollars and even other currencies in the open market.
On the other hand, Tariq anticipated that remittances will improve in the future as a result of the actions being taken by the government.
