Workers' remittances rises by 5.4% MoM to $2.38bn in December

January 10, 2024 (MLN): Workers' remittances have increased by 5.44% MoM in December to $2.38 billion, compared to $2.26bn in the previous month, the latest data issued by the State Bank of Pakistan (SBP) revealed today.

Meanwhile, on a yearly basis, workers' remittances increased by 13.42% YoY as compared to $2.1bn in the same month last year.

The inflows mainly came from Saudi Arabia, contributing $577.57 million, followed by the UAE with $419.15m, the U.K. with $368m, EU Countries with 284.95m, and the USA with 263.87m.

While on a cumulative basis, in 1HFY24, the total remittances stood at $13.43bn as compared to $14.42bn worth of inflows received in 1HFY23, depicting a fall of 6.82% YoY.

The remittances had been low in the earlier months of this year on account of increased disparity between official and grey market rates, as many non-resident Pakistanis preferred to use unofficial channels, which offered Rs20-25 higher exchange rate per dollar.

In response to these challenges, the government led crackdowns against speculators, hoarders, and smugglers to restrict illegal dollar outflows and effectively strengthening the PKR against the USD.

The crackdown has also exposed various bank staff members who colluded with these hoarders to store large amounts of dollars, which were subsequently used for hawala/hundi transactions.

Moreover, recent reforms introduced by the SBP to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements are also enhancing transparency.

The spread between interbank and open market rates, which reached a high of around 9% in May 2023 has now almost vanished, well below the IMF's 1.25% recommended limit.

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