According to the most recent figures issued by the State Bank on Wednesday, remittances continued to dip, falling to $2.1 billion in November from $2.5 billion in the same month previous year. Inflows fell by 5% from $2.215 billion in October of this year.
“Remittances of $2.10 billion are the lowest since August 2020,” stated Tahir Abbas, Head of Research at Arif Habib Limited, in a brief assessment.
In comparison to the interbank market rate of Rs225 per dollar, the black market provides a much higher price for the US dollar at Rs240-250. Many foreign employees have been enticed to transmit payments through illicit Hawala-Hundi operators as a result of this.
The decline in remittances may cause the rupee to depreciate more, as demand for the dollar has remained high despite the State Bank’s low foreign currency reserves.
“Remittances from Saudi Arabia and the United Arab Emirates (UAE) have primarily decreased,” Ismail Iqbal Securities Head of Research Fahad Rauf said in a brief analysis.
These nations are not facing substantial economic issues, indicating that the difference between official and Hawala-Hundi rates is a major factor contributing to the decline in remittances.”
Saudi Arabia and the United Arab Emirates have traditionally been the two largest providers of remittances to Pakistan. The fall in remittances from the two oil producing and exporting companies came despite improvement in their economies with the surge in international oil prices. Apart from that, the two Gulf states have not laid off people from their job markets, instead more Pakistanis have been hired in recent months.
Data breakdown shows that remittances from Saudi Arabia contracted 20% to $498 million in November 2022 compared to $622 million in the same month of previous year.
Receipts from the UAE decreased by 20% to $378 million compared to $475 million in the corresponding month of last year.