Pakistan sees dollar deposits rise to Rs87 billion as foreign currency demand stays firm

Pakistan recorded a rise in foreign currency deposits during the first nine months of FY2025-26, with resident account holders placing Rs87 billion into foreign currency accounts, according to the State Bank of Pakistan (SBP).

Dawn reported that the increase contrasts with the same period last year, when Resident Foreign Currency Deposits (RFCD) showed a net withdrawal of Rs9 billion.

Foreign currency accounts enable individuals and businesses to hold currencies such as US dollars, British pounds, euros and Japanese yen, offering protection against rupee depreciation and supporting international transactions.

Officials said regulatory tightening by the government and the State Bank of Pakistan has limited access to physical foreign currency, with exchange companies now required to provide rupee cheques in most cases instead of cash dollars.

Market sources said individuals are allowed to purchase up to $950 against a national identity card, with an annual ceiling of $2,000.

Exchange companies noted that most dollar allocations are currently linked to travel needs, including Umrah.

The earlier trend of using foreign currency to purchase cryptocurrencies has also slowed. In FY2024-25, a portion of dollar demand was linked to crypto transactions, which are not formally traded in Pakistan.

The government has since introduced a regulatory framework under the Virtual Assets Act 2026, with the Pakistan Virtual Asset Regulatory Authority designated to license and oversee crypto firms.

Officials indicated that the decline in crypto-related demand has contributed to higher retention of foreign currency within the banking system.

Under existing rules, deposits into these accounts can be made through remittances, travellers’ cheques issued abroad or proceeds from encashing government securities, subject to compliance with tax regulations under the Income Tax Ordinance, 2001.