KARACHI: Remittances sent home by overseas Pakistanis fell by 9 percent to $2.2 billion in October due to exchange rate differentials in the open and interbank markets and the global slowdown.
According to data released by the State Bank of Pakistan (SBP) on Friday, remittance inflows have declined by 15.7 percent from $2.62 billion recorded in the corresponding period of the previous fiscal year.
However, remittances declined by 9% on a year-on-year basis to $9.9 billion in four months (July-October) of the current fiscal year 2022-23.
In Oct 2022, workers’ remittances recorded an inflow of US$2.2 billion indicating a 9 percent decrease over last month. For details see https://t.co/rPOvn9UuaNhttps://t.co/7XBd4uw3tu pic.twitter.com/VgWszEQmJA
— SBP (@StateBank_Pak) November 11, 2022
Samiullah Tariq, Head of Research, Pakistan-Kuwait Investment Company, gave three major reasons for the decrease in funds:
- Rising global interest rates are driving the dollar.
- High inflation reduces disposable income.
- There is a difference between official and unofficial exchange rates.
Analysts also attributed the second consecutive decline to smuggling and higher rates offered in informal and illegal channels.
It should be noted that the difference between the dollar rate between the formal and informal markets widened during this month. As a result, a large portion of remittances are diverted to informal markets through handi and hawalat.
Last month, despite the rupee remaining stable in the interbank market, the dollar and even other currencies were depreciating in the open market.
However, Tariq predicted that with the steps the government is taking, remittances will improve further.
Data By Country
Pakistanis living in Saudi Arabia sent the largest amount of $570.5 million in October 2022. However, this is 7.47% lower than the $616.86 million received in September 2022.
Expats in the UAE sent 9.97 percent less money home as receipts fell to $427 million from $474.3 million.
Remittances from overseas Pakistanis to the UK fell by 9.42% to $278.8 million. They sent $307.8 million in September.
Furthermore, remittances from other Gulf Cooperation Council (GCC) countries declined by 12.64 percent to $258.3 million and remittances from European countries recorded a decline of 10.36 percent to $232.7 million in the month under review as compared to September. reached
