Friday, March 31, 2023

Increase in Remittances affect US Dollar

The financial year of the Pakistan has seen some of the surprising resurgence throughout the year. The paradigm shift of the financial world that the “Rupee” will pose the direct competition to the US$, the pandemic era played a huge role in the shift of power of the currencies. The US$ have been suffering quietly throughout the year with the economic crashes, inflations and recessions, with ongoing unemployment still plaguing the states.

According to “PSX” the Karachi stock exchange index is expected to surge around the 25% by the end of December 2021 with the return of economic activities in the midst of the pandemic. The economic growth, earning growth the probability of the huge liquidation will accelerate the GDP of the nation’s stock exchange to 1.8% of the fiscal policy 2020-2021.

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What is remittance?

During the increasing value of the currency there was the huge part played by our countrymen serving outside by transferring the money to their relatives and family members. So what is this economic term?

Remittance or foreign remittance sometimes known as, “Transfer of money from a foreign worker to their relatives in their home”. It is important to know that the remittance contributes the significant portion to the nation’s economic growth, according to GDP.

The countries that have these economic policies are US, Canada, UAE, Saudi Arabia and many other European countries. Pakistan is facing huge problem of brain drain but at the same time it acts as the double edge sword but in a positive way. The transfer of goods and services to the homeland helps to boost of economies and thus saving the countries from crashing of the stock markets. The emerging economies or developing countries rely heavily on the remittances.

Pakistan hugely benefited from these economic policies because according to various sources and stock exchange, the remittance from overseas has grown during December 2020 by 16.2% year to year to 2.34 billion dollars which is more as compared to 2019 by 2.03 billion dollars. For the six months of the fiscal years the remittance have reached new records of 14.2 billion dollars and surpassed previous years.

The 26% of the inflows came from the middle-eastern countries like Saudi Arabs by overseas Pakistanis sent goods to their homeland about 624.8 million dollars and from UAE it was about 511 million dollars, followed by UK at 325 million dollars. USA rose to 203.3 million dollars and 245.95 million dollars from EU.

You may call brain drain as the problem of the nation but it also served the countries greatly because it acts as the saving grace since the pandemic as the inflows increase because of the restrictions of the lockdown.

Image Courtesy DAWN

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