Pakistan’s Forex Firms See Sharp Drop in Dollar Sales

Pakistan’s foreign exchange market has witnessed a noticeable slowdown as exchange companies sold $646 million to banks during the first quarter of fiscal year 2026, marking a 14% decline compared to $750 million in the same period last year.

According to the Exchange Companies Association of Pakistan (ECAP), the fall in sales is attributed to reduced remittance inflows, a shortage of physical dollars, and payment delays by banks.

“We have sold $646 million in the banking market during the first three months of FY26. Though lower than last year, the figure is not discouraging,” said ECAP Chairman Malik Bostan in a statement.

Monthly Dollar Sales Trend

The data shows a consistent downward pattern:

• July 2025: $290 million

• August 2025: $170 million

• September 2025: $186 million

By comparison, the corresponding months of FY25 recorded $333 million, $294 million, and $213 million respectively — indicating a continued tightening in dollar liquidity.

Market Facing Shortage of Physical Dollars

Reports from Dawn suggest that the open market is facing a shortage of physical US dollars, prompting exchange companies to issue dollar-denominated cheques instead of cash deposits.

Dealers claim that banks are delaying payments to exchange firms, making it harder for them to maintain liquidity and meet customer demand.

Impact of Weak Remittances and Managed Exchange Rate

Experts say that weaker remittance growth and a possibly “managed” exchange rate are discouraging some inflows from reaching official channels.

Despite the rupee’s appreciation over the past two months, analysts believe that the exchange rate does not reflect actual market parity, affecting the flow of foreign currency.

Remittance Outlook and Economic Impact

Pakistan received $38 billion in remittances during FY25 and has set a $40 billion target for FY26. Malik Bostan expressed optimism that the target could still be achieved, saying that inflows remain “satisfactory.”

Economists note that sustaining remittance inflows at last year’s level would be crucial for exchange rate stability and for maintaining investor confidence amid fluctuating global market trends.

Key Takeaways

• Dollar sales down 14% YoY in FY26

• Physical dollar shortage tightening the open market

• Banks delaying payments to exchange firms

• Rupee appreciation not matching real market parity

• Remittance target: $40 billion for FY26