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.
