KARACHI: Indian aggression against Pakistan did not shake the confidence of overseas Pakistanis, as remittances remained high in May.

On May 7, India launched missile attacks that prompted strong retaliation, leading to a ceasefire agreement within three days.

“There is no sign that overseas Pakistanis are worried about the Indian aggression. They are sending remittances normally as they did in the past,” Exchange Companies Association of Pakistan General Secretary Zafar Parach told Dawn on Wednesday.

The brief conflict did not significantly affect Pakistan’s economy, but New Delhi is facing an image problem as it has lost its status as the region’s sole power.

Inflows remain robust in May ahead of Eidul Azha

“The inflows from overseas workers could be more than last month due to Eidul Azha,” said Mr Paracha.

The country received a record $4.053bn in remittances in March thanks to Ramazan and Eidul Fitr. However, the inflows declined in April to $3.182bn.

Following unexpectedly higher inflows from overseas Pakistanis, the SBP revised its foreign exchange reserves target to $14 billion and remittances to $38bn for FY25.

“The higher inflows will keep the market liquid, and the exchange rate stability will attract foreign investment and encourage the exporters to sell their proceeds,” said Amir Aziz, an exporter of readymade garments.

He mentioned that the increased inflows will relax import restrictions, which still pose concerns for exporters who need to import raw materials.

He said the government had set a $60bn export target for the next five years, but the policy of restrictions would not allow the country to achieve that goal.

He stated that Indian aggression did not negatively impact exports. Instead, it created an opportunity for Pakistan to replace New Delhi, the largest supplier of yarn, as its diplomatic relations with Dhaka reached their lowest point.

Due to a shortage of cotton yarn, Pakistan’s exports are limited. However, recent developments concerning trade with the US may increase the availability of cotton for the industry.

Pakistan has been exploring options to import US cotton to help reduce its trade deficit with the United States. “The US cotton is one of the best in the world; if Pakistan imports cotton from the USA, the industry has a chance to sell yarn to Bangladesh as well as to China,” said Amir Aziz.

Published in Dawn, May 29th, 2025