KARACHI, Jan 20: As overseas Pakistanis are putting in their share in the sustenance of economy by remitting their earnings back home, it pushed country’s foreign exchange reserves to record $17.28 billion on Thursday.
It was primarily the remittances which turned the current account deficit into surplus at the end of the half year of this current fiscal year.
The higher remittances with record foreign exchange reserves and current account surplus helped the weak rupee gain strength against the dollar.
“The record foreign exchange reserves are because of record remittances being sent by the overseas Pakistanis,” said Syed Wasimuddin, chief spokesman of State Bank.
Pakistanis sent $5.3 billion during the first half of this fiscal year with a growth rate of 17 per cent compared to last year.
Joint efforts were made by the ministries of Overseas Pakistanis and Finance along with State Bank to facilitate the overseas Pakistanis which helped boost remittance.
Higher remittances showed that efforts yielded results and helped the country stay strong on external front. Analysts said that the major impact was felt on the exchange rates. Had there been a fall in remittance, it could have been disastrous for the local currency.
The local currency has been the victim of poor economy which produces unexpectedly high inflation in double digit that cuts the purchasing power of rupee.
“Shortage of dollar can still trigger devaluation of rupee,” said Salman Ahmed, a banker dealing in inter-bank currency market. He said the threat is still there but inflow of remittances has saved the country from a possible threat. If remittances fall, the local currency could nosedive against the greenback as well as other international currencies.
Currency dealers in the open market said that the rupee gained slightly on Wednesday but the inter-bank witnessed a slip of 7 paisas mainly on account of higher oil prices in the international market.
They said higher oil prices may take the import bill up to $12 billion by the end of the fiscal year which would impact the country’s foreign exchange reserves yielding negative results for rupee-dollar parity.
Growing remittances have taken a large share in the foreign exchange inflows into the country while it is already the second highest dollar provider after export proceeds.
Exporters claim to earn $20 billion in this fiscal year while remittances growth shows that the total could reach higher than $10.5 billion by the end of this fiscal year.