February 13, 2023 (MLN): Workers' remittances for the month of January dropped to $1.9 billion, showing a slump of 13% YoY and 9.8% MoM compared to $2.18bn in January 2022 and $9.8bn in December 2022, respectively.
During the month, inflows were mainly sourced from Saudi Arabia ($407.6 million), the United Kingdom ($330 million), the United Arab Emirates ($269.2 million), and the United States of America ($213.9 million).
In 7MFY23, Workers’ remittances recorded an inflow of $16bn, down by 11% YoY compared to the same period of FY22.
January was the fifth successive month wherein the workers’ remittances recorded a continuous month-on-month decline in inflows mainly due to the increasing spread between official and informal channels.
Since the difference between official and Hawala/hundi rates become fairly noticeable, the general public finds the latter more profitable as it saves thousands of rupees.
Lately, the gap in dollar rate broadened between the formal and informal markets which have channeled a large chunk of remittances through hundi, hawala, etc.
While in some cases, due to colossal increases in the exchange rates, expats send lesser amounts of foreign exchange as after conversion, the amount in PKR is way more than the family needs.
As per sources, Afghan coal importers who trade coal against PKR, also convert the local units into dollars in Pakistan and send them to Afghanistan through Hawala/Hundi.
People from Afghanistan also buy dollars under the cover of Hawala Hundi which also creates pressure on remittances.
Resultantly, on paper, the drop in remittances through official channels created a shortage of dollars and it has become a difficult task to get dollars from the open market.
