Bloomberg reported on Tuesday that Pakistan’s crackdown on illegal foreign exchange trading has significantly boosted remittances.
Remittances surged by 34% to $14.8 billion in the five months through November compared to the previous year, based on data from the State Bank of Pakistan (SBP). The report also noted that the rupee had appreciated by 2% this year, making it one of the best-performing emerging-market currencies, supported by the International Monetary Fund (IMF) loan program and remittances.
Finance Minister Muhammad Aurangzeb had earlier expressed optimism about remittance inflows, forecasting $35 billion for the current fiscal year.
During the July-October period, Pakistan received $11.85 billion in remittances, averaging $2.96 billion per month. October saw an inflow of $3.05 billion, and September received $2.86 billion, indicating a rising trend in remittance growth.
However, the country’s total remittances for FY24 stood at $30.25 billion, a 13.3% decline compared to the previous year.
John Ashbourne, an economist at BMI, pointed out that currency reforms likely contributed to the rise in remittances, as more money is now being sent through official channels.
Experts attribute the growth in remittances to the stable exchange rate and the crackdown on illegal currency trading, which has moved many transactions to formal banking channels. The crackdown has helped increase foreign exchange reserves, which rose to over $12 billion by the end of November, the highest level since March 2022.
The Federal Investigation Agency (FIA) has raided money changers’ offices, arrested individuals, and deployed undercover agents to tackle illegal currency trading, a campaign that has been ongoing for over a year. Zafar Paracha, general secretary of the Exchange Companies Association of Pakistan, estimated that the size of the illegal dollar market has dropped by at least 20%, with up to $10 billion now flowing through official banking channels.
