In a positive sign for Pakistan’s foreign currency inflows, exchange companies reported a significant 30% year-over-year increase in dollar sales to banks during August. According to data released by the Exchange Companies Association of Pakistan (ECAP), sales reached $248.7 million for the month, a notable jump from the $174.9 million recorded in August of the previous year.
This encouraging growth in August marks a strong recovery from a comparatively sluggish July, where dollar sales had dipped to $230.7 million—down from $290.6 million during the same period last year. Looking at the first two months of the 2026-27 fiscal year collectively, exchange companies have sold a total of $479.5 million to banks, showing a steady improvement over the $465.5 million sold during the corresponding timeframe in the previous fiscal year.
Regional Tensions and Resilience Despite lingering concerns surrounding the Gulf conflict and its potential impact on Pakistan’s external inflows, remittances have demonstrated remarkable resilience so far. However, market observers remain cautious; emerging reports suggesting that Pakistani expatriate workers might face repatriation from Gulf nations have sparked fears regarding the long-term sustainability of these vital foreign exchange inflows if the regional unrest continues. Pakistan has set an ambitious remittance target of $44 billion for the 2026-27 fiscal year, aiming to surpass the $41.5 billion achieved in 2025-26.
Domestic Factors Influencing Inflows Domestic stability has also played a role in the recent currency trends. Malik Bostan, Chairman of ECAP, highlighted that the normalization of the situation in Kashmir has directly contributed to the improved flow of foreign currency. He estimated that cumulative inflows for July and August could have seen an additional $50 million boost if political disruptions in the region hadn’t hindered economic activity. To further facilitate seamless operations, ECAP has officially petitioned the State Bank of Pakistan to fully restore internet services across Kashmir, noting that partial access has already been successfully reinstated.