Exchange companies’ Dollar sales drop 12pc as banks capture remittance inflows

LAHORE (Monitoring Desk):Dollar sales by exchange companies to banks declined by 12 percent in the first seven months of FY2025–26, even as remittance inflows through formal banking channels increased by 11.3 percent over the same period, indicating a shift in foreign currency inflow patterns.

Data from the Exchange Companies Association of Pakistan showed that exchange companies sold $1.692 billion to banks during July–January, compared with about $1.921 billion in the corresponding period last year. On a monthly basis, companies sold $309 million in January, up from $260 million in January last year.

Industry participants attributed the decline in cumulative sales to stricter regulatory oversight that has constrained dollar trading in the open market. Exchange firms said sourcing and selling foreign currency has become more difficult under tighter compliance requirements and enforcement measures.

The State Bank of Pakistan is also encouraging consolidation in the sector, with smaller firms facing pressure to merge with larger entities. Banks are being encouraged to establish their own exchange companies, a move aimed at reducing the number of market players and strengthening controls against money laundering and dollar smuggling.

Market sources said cryptocurrencies may be diverting foreign currency flows, as higher returns could encourage remitters to convert dollars abroad and repatriate local currency through informal channels. A currency dealer said crypto investments had increased this year, although the total volume remains unknown. Earlier estimates by exchange companies had placed crypto-related investments between $800 million and $1 billion.

Exchange Companies Association Chairman Malik Bostan said seasonal inflows during Ramazan are expected to boost dollar sales, noting that remittances typically rise by up to 20 percent during the period, benefiting both banks and exchange companies.