The mess created by the unchecked slide of the rupee keeps taking its toll on Pakistan’s economy in more ways than can be counted.
By Muhammad Ali
ISLAMABAD: The State Bank of Pakistan said Monday workers’ remittances to the country during June 2023 were recorded at $2.2 billion, registering a 3.9 percent increase from May. However, the cumulative remittances for FY23, recorded at $ 27 billion, are down by a whopping 13.6 percent year-over-year (YOY) from FY22, the SBP’s External Communications Department said in a statement.
The slide of the Pakistani rupee against the US dollar in recent months seems to be the major culprit behind the trend of declining remittances. This continued depreciation of the rupee means that workers abroad have to send less in foreign currency for the same rupee amount.
Another reason could be the wide margin between interbank and kerb market created by the government’s efforts to restrict the rupee’s slide. The exchange rate differential thus created puts an incentive on remittances through grey channels, translating to a decline in remittance through banking channels.
The inflows during June 2023 were mainly sourced from Saudi Arabia ($515.1 million), United Kingdom ($343.0 million), United Arab Emirates ($324.7 million) and United States of America ($272.3 million), the ECD statement said.
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