Pakistan Receives Remittances In August

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Pakistan Receives Remittances In August

Pakistan Receives $2 Billion Remittances In August

The recent statement from the State Bank of Pakistan has revealed that the country received $2.09 billion in foreign remittances during August. In July, the country received $2.02 billion which suggests that an uptick was witnessed in the fund's inflow.

Pakistan is also following a debt program set by the International Monetary Fund (IMF) as the country closely avoided a sovereign default. According to the IMF instructions, the country is also trying to control the rate difference between the interbank and the open market.

USD/PKR Down by 2%

IMF has made it clear that the difference in US Dollar rate between these markets should be 1.25% or lower and has given it 5 business days to achieve it.

But when compared to the year 2022, Pakistan is facing a major decline in foreign remittances. In addition, the country was also facing a major gap in the USD rate offered by the open market and the interbank. During August 2023, the rate difference between the interbank and the open market reached 10%, which was the highest in the country's history.

In the last few days, the Pakistani Rupee (PKR) has been gaining ground against the USD and other currencies. On Monday, the 1 USD was equal to 301.16 PKR as the currency has gained almost 2% in the last few trading sessions. In addition, the rate difference between the open market & interbank has also shrunk and is now within the acceptable range set by the IMF.

However, the country still continues to face a major trade imbalance which means the risk of default will be back on the horizon in the next few months. The only way to avoid the risk of default is to make some major structural changes to the country's financial & economic model.

Besides the trade imbalance and dwindling foreign reserves, Pakistan is also facing a higher level of inflation, which can't be found in other South Asian countries like China.

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