Remittances in December down by 19pc.

The State Bank of Pakistan (SBP) said on Friday that remittances for the month of December 2022 came in at $ 2 billion, declining 19 per cent over the same month last year.

Compared to November, when overseas Pakistanis sent back $2.1bn, this translates into a decline of 3.2pc, and marks the fourth consecutive month remittances have fallen as expats opt out of using official channels to send money back home because the grey market is offering a much higher exchange rate.

Fahad Rauf, the head of research at Ismail Iqbal Securities, told Dawn.com that the declining trend could be attributed to the difference between US dollar rates in interbank, open and grey markets.

Currently, the dollar rate in the interbank market is Rs228 but it is priced at around Rs237 in the open market and above Rs250 in the grey market. As a result, experts believe people are using unofficial and illegal means, such as hawala and hundi, to send money from abroad because it is giving them a higher return.

Rauf urged the government to 'let go of the dollar peg', saying that it would result in both exports and remittances performing better.

'Bangladesh also witnessed a sharp fall in remittances when the gap between the open market and the official rate rose to 25 Taka per dollar. They increased the exchange rate for remittances, and the impact has been positive,' he said.

With cumulative inflows in the first half of the current fiscal year (Jul-Dec) at $14.1bn, remittances decreased by 11.1pc compared to the same period last year.

The inflows during December were mainly from Saudi Arabia ($516.3 million), United Arab Emirates ($328.7m), United Kingdom ($314.2m) and United States of...