In response to escalating tensions with India, the State Bank of Pakistan (SBP) has issued directives for Pakistan dollar tracking, ordering banks to closely monitor the outflow of US dollars from the country.
Authorities fear that if the conflict deepens, it could trigger a sharp rise in demand for the American currency. However, currency traders in the inter-bank and open markets report that no significant rush to purchase dollars has occurred so far, and overall demand remains stable.
Currency market insiders emphasized a critical financial connection between Pakistan and overseas workers. They noted that over 90% of remittances sent to Pakistan are routed through exchange companies headquartered in India, particularly those operating out of the Middle East.
This reliance raises concerns about potential disruptions if hostilities between India and Pakistan continue. A dealer warned that India might leverage these exchange companies to apply financial pressure on Pakistan during an extended conflict.
Speaking confidentially, currency dealers confirmed that Indian-based firms maintain vast networks across the Middle East, Europe, and the United States. These firms collect local currencies from Pakistani expatriates and transfer equivalent amounts in US dollars to Pakistan via formal banking channels.
To facilitate these flows, the SBP provides incentive payments to Indian exchange companies, amounting to approximately PKR 15 to 20 per dollar remitted, payouts that are also made in US dollars.
The move to tighten Pakistan dollar tracking highlights efforts to ensure financial stability amid growing geopolitical uncertainty.