Remittances hit 6-month peak at $2.2b.

KARACHI -- The remittances sent home by overseas Pakistanis hit a six-month high at $2.20 billion in September 2023, as expatriate workers increasingly used official channels following a government crackdown on currency smugglers and the illicit Hawala-Hundi traders.

The increase in inflows sparked hopes that the current account deficit would be moderate for the month. Remittances were, however, lower than market expectations of $2.30-2.50 billion.

According to State Bank of Pakistan's (SBP) data, the workers' remittances improved 5% to $2.20 billion in September compared to $2.09 billion in the previous month. The increase is expected to provide support to the rupee in maintaining its winning streak against the US dollar in both inter-bank and open markets.

On a year-on-year basis, however, the remittances dropped 11% in September compared to inflows of $2.48 billion in the same month of last year.

Overall, in the first quarter (Jul-Sept) of current fiscal year, the inflows dipped 20% to $6.33 billion compared to $7.89 billion in the same period of the previous year.

Talking to The Express Tribune, Pak-Kuwait Investment Company Head of Research Samiullah Tariq said that the government's crackdown eliminated the illegal currency markets, forcing many overseas Pakistanis to return to official channels for sending money back home to their relatives. He observed a jump of 10-30% in workers' remittances from the Middle Eastern countries including Saudi Arabia and the UAE where a majority of expatriate Pakistanis were doing jobs and most of the Hawala-Hundi traders were operating.

Inflows remained below market expectations owing to an increase in the rate of return on investments in developed countries, which encouraged the expatriates to park some of their savings in lucrative instruments in western markets. The flow of remittances from the UK and other European countries dropped slightly likely due to recession in the region. He noted that the flow of remittances remained low in other regional countries as well including Bangladesh.

Optimus Capital Management analyst Maaz Azam said that inflows would further improve from next month as the illegal market ran in Pakistan and the Middle East till September 5, 2023 before the launch of crackdown on September 6-7.

He projected that remittances would improve to around...