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SBP rebuts claim capping dollar price caused $3bn loss in remittances, exports

  • Central bank says decline in Pakistan’s exports and remittances result of a number of exogenous factors and domestic reasons
Published January 29, 2023
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The State Bank of Pakistan (SBP) has rebutted claims that capping the price of the dollar caused a loss of $3 billion in remittances and exports.

In a statement issued on Sunday, the central bank said: “Export of goods have been facing headwinds due to moderating demand in international markets as most of our major trading partners are going through a period of monetary tightening.”

Linking the decline in exports to a relatively stable exchange rate is not appropriate:F SBP

Explaining further, it said that the US Federal Funds rate has “surged from 0.25 percent in March 2022 to 4.5 percent to date,” suggesting a noticeable global monetary tightening.

It said that inflation has been significantly higher in the developed world, which has eaten into the purchasing power of consumers.

“These, together with domestic factors like devastating floods and ensuing supply disruptions, have negatively impacted exports.”

Against this backdrop, linking the decline in exports to a relatively stable exchange rate is not appropriate, the SBP statement said.

Explaining the reasons further, it said: “Workers’ remittances were gradually tapering off from the all-time high level of $3.1 billion achieved in April 2022 due to Eid-related flows.”

“This decline is primarily attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing the surplus funds that could be sent back to the homeland as remittances.

“Moreover, with the resumption of international travel post-COVID, some remittances have switched back to FCY cash transfers via overseas Pakistanis travelling to Pakistan.”

Concluding the explanation, the bank said that the “decline in Pakistan’s exports and remittances is a result of numbers of exogenous factors and domestic reasons.”

“It wouldn’t be appropriate to ascribe it to the exchange rate only,” it stressed.

The SBP’s statements come as reports suggested rupee’s stability in the inter-bank market for several weeks had caused exports and remittances to reduce after the exchange-rate gap in the open and black market rates increased.


Comments are closed.

G. Bal Jan 29, 2023 04:56pm
Excuses, excuses, excuses.................
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K Khan Jan 29, 2023 05:07pm
State Bank is only partly correct. They know the dual exchange rate was a significant factor. Remittances are mostly from workers not from developed countries.
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Virani Jan 29, 2023 06:07pm
It's all rubbish from Mr. Dar. It doesn't make any difference to them as their living is in London. Atleast resignation is all we need. Leave dis country alone its enough .
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Ghulam nabi Jan 29, 2023 09:16pm
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ALI RAZA Meghani Jan 29, 2023 10:02pm
If not effect then why remove the cap?
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MuhammadYounis Jan 29, 2023 11:06pm
Karobar Kayley
thumb_up Recommended (0)
MuhammadYounis Jan 29, 2023 11:09pm
میں بہت غریب ہوں ویلڈنگ والا کام میں نے سیکھا ہے میں اپنی دوکان بنانا چاہتا ہوں
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Muhammad Tahir leghari Jan 30, 2023 04:01am
As long there is no political stability and Military establishment should refrain from interfering in political affairs.
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Khan Jan 30, 2023 04:06am
The whole point of fixing the exchange rate artificially high was to make imports cheaper. SBP reserves were depleted to subsidize imports, which made exports more expensive and caused people like myself to hold off on sending remittances. The government then restricted imports, but kept wasting money to prop up the rupee, meaning that Pakistan was wasting money for absolutely no reason. Imports were banned, exports were made expensive. In the end it was a failed policy, and we have nothing to show except imminent default. Thank you Mr. Dar.
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zaheer Jan 30, 2023 06:51am
such laws/rules discouragement/disappoint the tax payers and the peoples living abroad sending $ to their country.
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Sarim Jan 30, 2023 06:06pm
Interbank and open market dollar rate was the main reason and expats started sending money via hundi to get open ma
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