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The remittances sent by overseas Pakistanis hit a three-month low in May as they reach $2.10 billion. A report by the State Bank of Pakistan (SBP) mentioned that this is 10.4% less than the remittances received during the same period last year, which was $2.35 billion.

One of the major reasons for this decline in remittances is the popularity of other “Informal” channels offering lucrative rupee-dollar exchange rate.

According to SBP, the remittances received in May are 4.4% less than the previous month. The decline has further widened the gap between the demand and supply of foreign currency in the local market, posing threat to the country’s foreign debt repayments.

Tahir Abbas, Head of Research at Arif Habib Limited, while talking to the media said, “Whenever the gap widens between the two markets, overseas Pakistanis switch to informal channels, where illegal operators offer significantly higher exchange rates compared to the official rates.”

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