By Ahmed Mukhtar Naqshbandi
ISLAMABAD: State Bank of Pakistan (SBP) on Sunday rebutted that capping the price of the dollar caused a loss of $3 billion in exports and remittances.
It said in a statement that exports are facing headwinds due to moderating demands in international markets and major trading partners are going through a period of monitory tightening.
Global economic slowdown causes fall in remittances
Drops in remittances of Pakistan are due to global economic slowdown, the statement added.
In the United States (US), the Federal Funds rate has surged from 0.25% in March 2022 to 4.5% to date.
On the other hand, inflation has been significantly higher in the developed world, eating into the purchasing power of consumers.
This rising inflation rate has led to a higher cost of living abroad and has reduced the surplus funds that could be sent back to the home country in the shape of remittances.
In addition, after COVID-19 restrictions were lifted and international travel fully resumed, some remittances switched back to FCY cash transfers via overseas Pakistanis traveling to Pakistan.
Thus the decline in exports and remittances in Pakistan is the result of a number of exogenous factors and domestic causes do not affect the exchange rate only.
