Karachi:
According to the State Bank of Pakistan, worker remittances recorded a significant inflow of $3.1 billion during December 2024, up 29.3 percent year-on-year (YoY) and 5.6 percent month-on-month (MoM) (SBP )
Overall, remittances during the first half of FY25 (H1FY25) reached an impressive $17.8 billion, reflecting a 32.8% increase over the $13.4 billion received in H1FY24.
Speaking to The Express Tribune, Ali Najeeb, head of equity sales at Insight Securities, said, “We expect remittances to cross $35 billion by the end of this year.”
According to the SBP, the main sources of remittances in December 2024 were Saudi Arabia at $770.6 million, the United Arab Emirates (UAE) at $631.5 million, the United Kingdom at $456.9 million, and the United States of America at $284.3 million. send
Najib attributed the phenomenal increase in remittances to three main factors: the black market and narrowing of the interbank gap, the strengthening of the rupee against the dollar, and the strong performance of the Pakistan Stock Exchange (PSX).
He said the Special Investment Facilitation Council (SIFC) implemented administrative measures to narrow the gap between the black market and interbank exchange rates, encouraging formal inflows of remittances. A stable rupee, with a 1% appreciation against the US dollar in 2024, and the State Bank’s efforts to build foreign exchange reserves (now standing at $11.7 billion) dampened speculative activity. By preventing boom-bust cycles, this policy encouraged foreigners to send remittances through formal channels.
He added that the PSX emerged as one of the top performing markets, further boosting investor confidence.
Najib projected a steady rate of remittances of $3 billion a month from January to June 2025, which is likely to push total remittances to over $35 billion by the end of FY25—a year-on-year increase. 35 percent higher, which is an increase of 29 percent. .
Exchange Companies Association of Pakistan (ECAP) Chairman Zafar Paracha highlighted that better control of leakages has significantly increased remittances. Efforts to regulate open and gray markets have been instrumental in improving the inflow of formal remittances.
Administrative measures implemented by the interim government and maintained by subsequent administrations have begun to yield results, particularly to curb the smuggling of goods and currency by cross-border mobs, leading to earlier remittances. There was damage. He said that strict immigration policies and better documentation have further contributed to this positive trend.
The government has effectively controlled all open market, gray market and interbank rate differentials by documenting dollar-rupee parity and revoking licenses of non-compliant institutions. For the first time, law enforcement agencies (LEAs) and bank officials were arrested in operations against hawala and handi networks.
Pracha recalled the dire situation two years ago, when the dollar rate was Rs 350 in the gray market, Rs 335 in the open market and Rs 317 in the interbank rate. The daily debate revolved around the country’s default and the possibility of the dollar reaching 500/$. Today, the rupee is stable at around Rs 278, a significant improvement.
However, Pracha cautioned against policies that excessively support export lobbies, citing the State Bank governor’s statement that $9 billion was bought last year to stabilize the dollar. He noted, “Without such interventions, the dollar could have depreciated by Rs 50, bringing its value down to around Rs 240, leaving only one or two sections of the society without money. Rather, the entire country will benefit.”