Pakistan’s remittances drop 14% to $2.1bn in November

Pakistan’s remittances drop 14% to $2.1bn in November. Remittances sent home by Overseas Pakistanis slowed down to $2.1 billion in November 2022 as the use of unofficial channels (like hundi and hawala) picked up pace amid the currency crunch in the country.

The State Bank of Pakistan‘s (SBP) data showed Wednesday that the receipts contracted 4.8% in November 2022 compared to inflows of $2.21 billion in the prior month.

The remittances were 14.3% lower compared to the same month of the previous year when they stood at $2.45 billion.

Financial pundits said non-resident Pakistanis had apparently opted to send remittances through the open market and unofficial channels (like Hundi and Hawala), as they offered a much higher exchange rate.

Consequently, the inflows through official channels faced a setback. The price of the US dollar was higher by Rs10-12 in the open and black markets compared to the rate offered by banks for most of the days in the month.

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With the cumulative inflow of $12 billion in July-November FY23, the remittances decreased by 9.6% as compared to the same period of last year, the central bank said.

Despite the rupee trading between a range of 220-224 in the interbank market last month, a shortage of dollars and even other currencies was witnessed in the open market.

Amid the ongoing currency fluctuations in cash-strapped Pakistan, a black market for dollars has sprung up in Pakistan after the SBP restricted access to foreign currency to preserve depleting reserves — which plunged to a four-year low of $6.7 billion, Bloomberg reported.

While the money-changing firms claim they have no dollars despite current exchange rates on display outside their businesses, it was learnt that customers could still buy the greenback on the black market at a rate about 10% higher than the one offered in the regular one.

Country-wise data

Pakistanis residing in Saudi Arabia remitted the largest amount of $498 million in November 2022. However, it was 12.7% lower than the $570.5 million received in October 2022.

Expatriates in the UAE sent home 11.5% less amount as receipts declined from $427 million to $377.8 million.

Remittances from overseas Pakistanis in the UK dropped 7.28% to $299.1 million. They sent $278.8 million in October.

Moreover, remittances from other Gulf Cooperation Council (GCC) countries slightly declined by 0.3% to $257.5 million and a 5.45% decrease was recorded in inflows from European countries, which clocked in at $245.4 million in the month under review compared to October.