After posting a seven month high in March-23, remittances dipped in April-23 by 29 percent year-on-year. Though these critical inflows remain above the $2 billion threshold, they were $2.25 in April versus $3.12 billion in April-22. The month-on-month slowdown in remittances stood at13 percent. The trend of falling remittances continues.
Altogether, in the first 10 months of current fiscal year -10MFY23, the remittances by overseas Pakistanis fell by 13 percent year-on-year, falling from $26 billion to $22.7 billion.
The month-on-month decline in remittances in April-23 came on the back of long Eid Holidays and extra inflows seen in the previous month during the month of Ramzan. Before that, the remittances had been falling over the six to seven months period due to currency fluctuations. The artificially cheap dollar price in the interbank market drove many to the unregulated black market, as did overseas Pakistanis transferring money home. As the use of hawala and hundi continued to provide better rates to senders, the large gap in interbank, open market, and illegal market rates for the dollar became a key reason behind declining remittances through legal channels. However, the exchange rate was uncapped in March-23 which gave a boost to the remittances.
Remittances could see another dip in May-23 as the inflows usually drop in the month following Ramzan. But improvement will come in with inflows increasing ahead of Eid ul Azha.
However, things might not be as described if the current political, economic and now security situation of the country prolongs and is factored in.
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