Central bank rejects claim capping dollar price caused $3 billion losses in exports, remittances

A dealer counts US dollars at a money exchange market in Karachi, Pakistan on January 27, 2023. (AFP)
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Updated 29 January 2023
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Central bank rejects claim capping dollar price caused $3 billion losses in exports, remittances

  • State Bank of Pakistan (SBP) says rising inflation, global economic slowdown behind dwindling remittances, exports
  • SBP says devastating floods last year and ensuing supply disruptions also contributed to decline in Pakistan's exports

ISLAMABAD: The State Bank of Pakistan (SBP) on Sunday rejected media reports which stated that capping the price of the US dollar caused the country losses worth $3 billion in exports and remittances, saying that a decline in both was due to "exogenous factors."

In a major sign that it was willing to swallow the bitter pill and agree to the International Monetary Fund's (IMF) tough conditionalities, Pakistan's foreign exchange companies last week removed the cap on the US dollar. The price of the rupee, as a result, fell to a 24-year-low against the greenback, compounding problems for the South Asian country. 

Local media reports had claimed that capping the price of the US dollar had dealt Pakistan losses of $3 billion in exports and remittances as people preferred to send remittances to Pakistan via illegal channels, which offered a better rate. 

In a press release, the SBP rejected the reports, describing them as "incorrect." It added that Pakistan's exports were facing headwinds due to moderating demand in international markets as the country's trading partners go through a period of monetary tightening. 

"For instance, US Federal Funds rate has surged from 0.25 percent in March 2022 to 4.5 percent to date; suggesting a noticeable global monetary tightening," the SBP said. 

The central bank said inflation has been "significantly higher" in developed countries, eroding people's purchasing power. The SBP also said that devastating floods last year and ensuing supply disruptions are also to blame for Pakistan's dwindling exports. 

"In this backdrop, linking decline in exports to relatively stable exchange rate is not appropriate," it added. 

It said workers' remittances were gradually "tapering off" from the all-time high figure of $3.1 billion in April 2022 due to Eid-related flows.  

"This decline is primarily attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing the surplus funds that could be sent back to homeland as remittances," the central bank added.

Pakistan's foreign reserves have dipped to an alarming eight-year low of $3.6 billion, barely enough to cover three weeks of imports. Islamabad hopes the resumption of the IMF's stalled loan program would help unlock inflows from allies and multilateral organizations.


International Day of Family Remittances: Pakistani PM hails expats for record payments this year

Updated 6 sec ago
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International Day of Family Remittances: Pakistani PM hails expats for record payments this year

  • In current fiscal, overseas Pakistanis remitted record $34.9 billion, a 28.8 percent increase over the previous year
  • Pakistan received $3.7 billion in workers’ remittances in May 2025 alone, a strong 13.7 percent year-on-year

ISLAMABAD: Prime Minister Shehbaz Sharif on Monday hailed the record $34.9 billion in remittances sent by overseas Pakistanis this fiscal year, describing it as a sign of their “growing confidence in the government’s economic policies.”

In a statement marking the International Day of Family Remittances, the premier said the 28.8 percent year-on-year rise in remittances had significantly bolstered the country’s foreign exchange reserves. Pakistan received $3.7 billion in workers’ remittances in May 2025 alone, a strong 16 percent increase month-on-month and 13.7 percent year-on-year.

“These historic figures are a testament not only to the hard work and loyalty of our diaspora but also to their growing confidence in the government’s economic policies,” Sharif said, calling remittances a “powerful pillar supporting Pakistan’s economic resilience.” 

“This trust reinforces our resolve to redouble efforts for the revival and growth of our economy.”

With over 9 million Pakistanis living abroad, mainly in the Gulf, Europe, and North America, the prime minister praised the expatriate community for their enduring commitment to families back home and their role in sustaining the national economy.

Sharif reiterated the government’s commitment to attracting foreign investment and expanding exports to ensure long-term economic stability, stressing that remittances remained crucial to this goal.

“Let us renew our collective pledge to work hand in hand with our diaspora, development partners, and all stakeholders to overcome our economic challenges and usher in a new era of investment, prosperity, and national progress,” the premier said.


Pakistan closes pedestrian traffic at all Iran border crossings as Israel strikes escalate

Updated 15 min 26 sec ago
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Pakistan closes pedestrian traffic at all Iran border crossings as Israel strikes escalate

  • Closures affect crossings in Balochistan’s border districts of Chaghi, Gwadar, Kech, Panjgur 
  • All are key routes for cross-border movement, local trade between Iran and Balochistan province

 QUETTA: Pakistani authorities have closed all major border crossings with Iran for pedestrian traffic amid escalating cross-border strikes between Iran and Israel, officials in the southwestern Balochistan province said on Sunday.

The closures affect the Taftan crossing in Chaghi district, the Gabd-Rimdan crossing in Gwadar district, the Chedgi and Jirrak crossings in Panjgur district and the Rideeg Mand crossing in Kech district. All are key routes for cross-border movement and local trade between Balochistan and Iran. 

“All kinds of pedestrian movement at the Gabd-Rimdan border has been suspended due to the Iran-Israel conflict,” Jawad Ahmed Zehri, assistant commissioner for Gwadar, told Arab News.

Trade activity at the crossing would remain open and Pakistani citizens stranded in Iran would be allowed to return, he said, but no new entries into Iran would be permitted through this point until further notice.

In a separate order, authorities also said the Taftan border crossing in Chaghi district had been closed for pedestrian traffic.

“We have closed pedestrian movements at the Taftan border until further notice,” said Naveed Ahmed, assistant commissioner for Taftan, adding that trade and customs operations from the crossing were continuing as usual.

The Chedgi, Jirrak and Mand Radig border crossings have also been shut, officials in the Kech and Panjgur districts confirmed. 
 
The closures come amid heightened tensions following Israeli strikes on Iranian cities since Friday with scores killed, including senior Iranian military commanders.

The blockade is expected to affect daily wage laborers, small-scale traders and local residents who depend on frequent cross-border movement for commerce, supplies and family visits.

Small items such as fruit, vegetables and household goods are commonly traded by hand or in small vehicles along these routes.

Bilateral trade volume between Pakistan and Iran reached $2.8 billion in the last fiscal year, which ended in June. Both countries have signed a memorandum of understanding with the aim of increasing this volume to $10 billion.

Iran also supplies about 100 megawatts of electricity to border towns in Balochistan.


Israel’s unchecked nuclear capability will have ‘catastrophic consequences,’ Pakistan warns West

Updated 29 min 44 sec ago
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Israel’s unchecked nuclear capability will have ‘catastrophic consequences,’ Pakistan warns West

  • Analysts warn Israel’s unacknowledged nuclear weapons could encourage it to take more aggressive steps
  • Tensions have surged in the Middle East following Israel’s June 13 “Operation Rising Lion” aerial offensive on Iran

ISLAMABAD: Pakistan’s defense minister Khawaja M. Asif on Sunday warned Western governments that their support for Israel risked unleashing “catastrophic consequences,” citing concerns over Israel’s nuclear capabilities and regional aggression.

Tensions have surged in the Middle East following Israel’s June 13 “Operation Rising Lion” aerial offensive targeting Iranian nuclear and military facilities, reportedly killing more than 130 people, including senior military commanders and nuclear scientists. Iran has retaliated with missile and drone barrages on Israeli cities, sparking concerns of a wider conflict. 

Israel is widely believed to possess nuclear weapons but maintains a policy of ambiguity and is not a party to the Nuclear Non-Proliferation Treaty (NPT). The 1970 accord is aimed at preventing the spread of nuclear weapons, promoting disarmament, and ensuring peaceful use of nuclear technology. Pakistan is also not a signatory to the NPT but frequently underscores its commitment to nuclear safety and non-proliferation principles through other international frameworks.

Displaced Palestinians stand outside tents as they watch trails of Iranian missiles targeting Israel, from Rafah's Mawasi area in the southern Gaza Strip on June 15, 2025.(AFP)

Analysts warn that in the current volatile situation, Israel’s unacknowledged nuclear weapons could encourage it to take more aggressive steps, increasing the risk that the conflict could spread across the region or even spark a wider international crisis.

“World should be wary and apprehensive about Israel’s nuclear prowess, a country not bound by any international nuclear discipline,” Asif said in a post on social media platform X. “It is not signatory to NPT or any other binding arrangement.”

The minister contrasted Israel’s position with Pakistan’s, stating that Islamabad was a signatory to “all international nuclear disciplines” and maintained a nuclear program solely for “the benefit of our people and defense of our country against hostile designs.”

“We do not pursue hegemonic policies against our neighbors,” Asif added, accusing Israel of doing just that through its military actions. 

“Western world must worry about conflicts being generated by Israel. It will engulf the whole region and beyond. Their patronage of Israel, a rogue state, can have catastrophic consequences.”

The Pakistani minister’s comments come amid growing international concern over the humanitarian toll of Israel’s ongoing military operations in Gaza, as well as fears that the conflict could expand regionally following tensions with Iran and Hezbollah.

There was no immediate response from Israeli or Western officials to Asif’s remarks.


Pakistan hikes petrol, diesel prices in fortnightly review

Updated 52 min 12 sec ago
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Pakistan hikes petrol, diesel prices in fortnightly review

  • Government sets petrol at Rs258.43 per liter, up from Rs253.63
  • High-speed diesel will cost Rs262.59 per liter, up from Rs254.64

KARACHI: Pakistan’s government has increased fuel prices, raising the rate of high-speed diesel (HSD) by Rs7.95 per liter and petrol by Rs4.80 per liter effective from today, Monday, an official notification from the finance division said. 

The notification set the price of petrol at Rs258.43 per liter, up from Rs253.63, while high-speed diesel will cost Rs262.59 per liter, up from Rs254.64.

The revision is based on “recommendations from the Oil and Gas Regulatory Authority and relevant ministries,” the finance division saiad. 

The government did not provide a specific explanation for the hike.

Fuel prices in Pakistan are generally influenced by global oil market trends, currency fluctuations, and changes in domestic taxes.

Fuel costs are revised every two weeks and have a direct impact on inflation. Rising fuel prices increase production and transportation costs, leading to higher prices for goods and services across the board in Pakistan, including food and other essential items. This direct relationship is further amplified by the country’s dependence on imported fuel. 


Pakistan closes pedestrian traffic at key Iran border crossings as Israel strikes escalate

Updated 15 June 2025
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Pakistan closes pedestrian traffic at key Iran border crossings as Israel strikes escalate

  • The closures affect the Taftan crossing in Chaghi district and the Gabd-Rimdan crossing in Gwadar district
  • Both are key rotes for cross-border movement, local trade in Pakistan’s Balochistan province

QUETTA: Pakistani authorities have closed two major border crossings with Iran for pedestrian traffic amid escalating cross-border strikes between Iran and Israel, officials in the southwestern Balochistan province said on Sunday.

The closures affect the Taftan crossing in Chaghi district and the Gabd-Rimdan crossing in Gwadar district, both key routes for cross-border movement and local trade between Balochistan and Iran. 

The Gabd-Rimdan border crossing is a point on the Iran-Pakistan border, specifically at “BP-250,” the second crossing along the 900-kilometer border between the two countries. The crossing facilitates trade and people-to-people contact between Iran and Pakistan.

“All kinds of pedestrian movement at the Gabd-Rimdan-250 border have been suspended due to the Iran-Israel conflict,” Jawad Ahmed Zehri, assistant commissioner for Gwadar, told Arab News.

Trade activity at the crossing would remain open and Pakistani citizens stranded in Iran would be allowed to return, he said, but no new entries into Iran would be permitted through this point until further notice.

In a separate order, authorities also closed the Taftan border crossing in Chaghi district for pedestrian traffic.

“We have closed pedestrian movements at the Taftan border until further notice,” said Naveed Ahmed, assistant commissioner for Taftan, adding that trade and customs operations from the crossing were continuing as usual.

The closures are expected to affect daily wage laborers, small-scale traders and local residents who depend on frequent cross-border movement for commerce, supplies and family visits.

Small items such as fruit, vegetables and household goods are commonly traded by hand or in small vehicles along these routes.

The closures come amid heightened tensions following Israeli strikes on Iranian cities since Friday with scores killed, including senior Iranian military commanders.

The bilateral trade volume between Pakistan and Iran reached $2.8 billion in the last fiscal year, which ended in June. Both countries have signed a memorandum of understanding with the aim of increasing this volume to $10 billion.

Iran also supplies about 100 megawatts of electricity to border towns in Balochistan.