KARACHI: Workers’ remittances posted 5 percent growth during February compared to January as cap on exchange rate lifted to enhance formal inflows.
According to State Bank of Pakistan (SBP), workers’ remittances recorded inflows worth $ 2 billion during February 2023 compared to $1.89 billion in January 2023, showing an increase of $94 million.
However, on a year-on-year basis, home remittances decreased by 9.5 percent in February 2023 as against February 2022, in which $2.19 billion remittances were arrived.
The inflows of workers’ remittances were on decline since September 2022 and monthly inflows reached below $2 billion in January 2023 due to the massive difference in the exchange rate of the formal and informal market.
In order to streamline the exchange market and enhance the home remittances inflows, the SBP on January 26, 2023 lifted the unofficial cap on the exchange rate. After the removal of the cap, the Pak Rupee depreciated by 9.61 percent in a single day and the exchange rate in the interbank market closed at Rs 255.43 to the dollar up from Rs 230.89.
The increase in the formal exchange rate encourages the overseas Pakistanis to send remittances to their beloveds through legal channels as they are getting good exchange rate in the formal market after the removal of cap.
Cumulatively, workers’ remittances declined by 10.8 percent during the first eight months of this fiscal year (FY23). The country received inflow amounted to $ 18 billion during July-Feb of FY23 down from $20.184 billion is same period of last fiscal year (FY22), depicting a declined of $2.18 billion
During the first eight months of this fiscal year, major inflows of home remittances were arrived from Saudi Arabia, United Arab Emirates (UAE), United Kingdom (UK) and United States of America (USA) and EU countries.
Saudi Arabia ranked first with $4.346 billion inflows. In addition, home remittance worth $1.972 billion, up by 3 percent, arrived from the USA, $2.631 billion (down 5.7 percent) from the UK and $3.197 billion, fell by 15.5 percent, from the UAE during July-Feb of FY23.
Copyright Business Recorder, 2023