ISLAMABAD: The State Bank of Pakistan reported 5.4 per cent growth in the inflows of remittances in December 2023. According to SBP, workers’ remittances recorded an inflow of US$2.4 billion during Dec 23.
- In terms of growth, during Dec 23, remittances increased by 5.4 percent on m/m and 13.4 percent on y/y basis.
- Workers’ remittances inflow of US$ 13.4 billion has been recorded in first six months of FY24.
- Remittances inflows during Dec 23 were mainly sourced from Saudi Arabia ($577.6 million), United Arab Emirates ($419.2 million), United Kingdom ($368.0 million) and United States of America ($263.9 million).
- The remittances had been low in the earlier months of this year on account of increased disparity between official and grey market rates, as many non-resident Pakistanis preferred to use unofficial channels, which offered Rs20-25 higher exchange rate per dollar.
- In response to these challenges, the government led crackdowns against speculators, hoarders, and smugglers to restrict illegal dollar outflows and effectively strengthening the PKR against the USD.
- The crackdown has also exposed various bank staff members who colluded with these hoarders to store large amounts of dollars, which were subsequently used for hawala/hundi transactions.
- Moreover, recent reforms introduced by the SBP to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements are also enhancing transparency.
- The spread between interbank and open market rates, which reached a high of around 9% in May 2023 has now almost vanished, well below the IMF’s 1.25% recommended limit.
