Pakistan’s exchange companies played a key role in strengthening the country’s foreign exchange reserves during fiscal year 2025-26. They sold an estimated $5 billion to $6 billion to commercial banks over the year. This steady supply of dollars helped support the economy at a time of high remittance inflows.
According to Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan (ECAP), these firms supplied around $500 million every month on average. The money mainly came from overseas Pakistanis sending money home. In FY26, Pakistan received a record $41.6 billion in remittances, making foreign workers one of the biggest sources of foreign currency for the country.
This dollar supply from exchange companies supported the external account and helped build reserves. However, the sector faces challenges. The State Bank of Pakistan (SBP) has tightened rules to formalize the foreign exchange market. During the year, at least five exchange companies were shut down for violations, and one gave up its licence. Many dealers complain that strict compliance rules have raised costs, making business less profitable. Some firms may close if conditions do not improve.
To bring more activity into the formal system, the SBP has encouraged banks to start their own exchange companies. So far, 14 banks have done so. This move aims to improve services for remittances and currency trading.
The government has also reduced some incentives for banks on remittances due to high costs. Instead, it is pushing Pakistani missions abroad to find more job opportunities for workers. Experts say while remittances are strong, Pakistan needs to increase exports and attract investment for long-term stability.