Remittances declined in September by 12.3 percent year over year and 10.5% month over month, according to data released by the State Bank of Pakistan (SBP) on Tuesday. The flows were $2.72 billion in August and $2.78 billion in September 2021.
According to the central bank, the total amount of transfers during July through September was $7.7 billion, down 6.3 percent from $8.19 billion during the same time last year.
According to currency merchants, the true reason for the low amount of remittances in September was the disparity in dollar exchange rates between legal and illicit markets.
According to the kerb market, there isn’t much of a difference in dollar rates, according to Malik Bostan, chairman of the Pakistani Exchange Companies Association.
The grey market, which was a major factor in the increase in the price of the dollar, still offers at least 5 percentage points greater than the interbank rate. The open market was offering Rs246 at the top of the dollar’s interbank rate of Rs240 in August, whereas the grey market rate was indeed higher at Rs250.
The $300 million in September, according to currency dealers, has been either transferred through the shady hawala money transfer system or utilized in part to settle accounts in Dubai. September’s inflow was $300 million much less August’s $2.7 billion.
“The rate of the dollar in Kabul is still Rs. 10 per dollar higher than the rate in Pakistan, reflecting the circumstance. According to Mr. Bostan, Pakistanis are spending dollars in Dubai to purchase coal from Kabul, despite the fact that the deal called for rupee payments to be made to Afghan coal merchants.
Remittances from the United States were the only ones to significantly improve, rising by 7 percent to $817 million.
Capital flows from the UK decreased by 4.2 percent to $1.089 billion, those from the UAE by 8.7 percent to $1.462 billion, those from the GCC nations by 4.1 percent to $877 million, and those from EU countries by 7.7 percent to $829 million between July and September.