Exchange companies’ dollar sales jump 30pc

In August, exchange companies recorded a 30% increase in dollar sales to banks, according to the Exchange Companies Association of Pakistan (ECAP). The companies sold $248.7 million to banks in August, compared to $174.9 million in the same month last year. While July saw a decline to $230.7 million, the August figure indicates higher inflows.

This surge in sales can be attributed to the ongoing Gulf War, which has not affected Pakistan directly in terms of remittances. However, media reports of Pakistani workers returning from the Gulf have caused concern.

The Pakistani government has taken note of the situation, and the market fears a shock if the war continues. Pakistan is already grappling with high oil prices, the primary casualty of the war. The August inflow might be even higher if Kashmir's unrest is fully resolved. Malik Bostan, ECAP's Chairman, noted that if the Kashmir conflict had not disrupted affairs, there could have been an additional $50 million in inflows during July-Aug of this year.

He added that ECAP has formally requested the State Bank to permit internet access throughout Kashmir, with partial access already restored.

Collectively, exchange companies sold $479.5 million in the second half of FY27, an increase from $465.5 million in the same period last year. Pakistan anticipates higher remittances in FY27, targeting $44 billion against the $41.5 billion inflow recorded in FY26. Nonetheless, currency experts assert that the prolonged war has altered economic conditions across the Middle East.

Gulf countries are in distress since they lack a revenue source other than oil. The UAE, once the region's most prosperous economy, is now striving to avoid expelling expatriates, potentially casting a grim shadow over Dubai.