Remittances decline by 14% in FY23
Remittance the inflow of worker remittances sent home by overseas Pakistanis has slowed significantly, falling 14% to $27 billion in the previous fiscal year ending June 30, 2023. The availability of a more favorable rupee-dollar exchange rate has diverted cash flows from legal channels to illicit rest, affecting the country’s foreign exchange reserves, which currently stand at a critically low $4.4 billion.
In June, the last month of FY23, remittances improved by 4% to USD 2.2 billion from USD 2.1 billion received in May 2023. People living abroad sent more money to their family members to celebrate Eidul Azha , which fell in the last week of the year. the month. However, monthly transfers were down 22% compared to last month.
Yousuf M Farooq, former director of research at Topline Securities, explained that “government intervention in the (legal) foreign exchange markets from time to time during the year has resulted in persistent differences in the rupee-dollar exchange rate between the legal and illegal markets. .” “The availability of better exchange rates in the illegal hawala-hundi market has attracted some overseas Pakistanis, resulting in remittances to Pakistan through this channel,” he said.
During the year, the exchange rate gap widened to about Rs 30 against the dollar, affecting workers’ remittances. Farooq noted that the slowdown in remittances mainly came from Middle Eastern countries such as Saudi Arabia and the United Arab Emirates (UAE), where hawala-hundi operators are also present. In contrast, inflows from compliant Western countries such as the United States (US) and the United Kingdom (UK) were relatively better.
Published in EDP BLOGS on Jul 11,2023.
