KARACHI: Inflows of foreign exchange through banking channels remained high in September which may increase the remittances up to $2 billion, said bankers and money changers.
Currency experts said the inflows of banking channels was high due to at least four reasons that forced the overseas Pakistanis to send their money only through banks.
“Closure of commercial flights compelled all the remitters to adopt banking channels to send their money,” said Forex Association of Pakistan President Malik Bostan, adding that it has also stopped currency smuggling.
He said that due to coronavirus, movement of Pakistanis living abroad has been curtailed which in turn has redirected inflows towards formal channels. “They used to bring thousands of dollars in their bags instead of sending them through the banking system,” he said.
While bankers are also witnessing higher inflows, they were reluctant to give any definite figure for the total value sent through banking channels in September.
“The passage of Financial Action Task Force bills from National Assembly and Senate has greatly reduced inflows through hundi and hawala. This foreign exchange is also coming through banking channels,” said a banker dealing with currencies in the interbank market.
Earlier, dealers in the open market had said that illegal money changers, who were in thousands across the country, disappeared from the trading business which helped banks receive higher inflows.
The country received increased remittances in the first two months of FY21. According to the State Bank of Pakistan Governor Reza Baqir in the monetary policy meeting on Monday, they came on the back of orderly exchange rate conditions as well as supportive steps taken by the government and SBP under the Pakistan Remittance Initiative.
Despite high remittances, the exchange rate did not improve in favour of the rupee. However, currency dealers and bankers maintained that due to rising inflows and continued current account surplus in FY21, the rupee-dollar parity remained almost stable.
“The current account surplus in July and August stabilised the exchange rate and will continue to help the country,” said Bostan, adding that exchange companies are depositing higher amount of dollars into the banks. The open markets are doing almost one-sided business as buyers make up just 10 per cent of the trading while the rests are sellers.
Dollar deposits by the exchange companies and extremely low buying of greenback from open markets has increased the foreign exchange reserves of commercial banks, which rose to an almost 12-month high at $7.202bn on September 18.
In September 2019, holdings of the commercial banks were $7.292bn.