By WorldRemit

In the past few days, the value of the Pakistani rupee has significantly depreciated due to various factors including foreign exchange companies removing a cap on the exchange rate, sky-high inflation across the country, and rising interest rates, representing the largest single-day fall in over two decades.  

In late January, the Pakistani rupee fell 9.6% against the U.S. dollar with the International Monetary Fund likely now to resume lending to the country. Pakistan, as a result, has barely enough foreign exchange reserves to cover three weeks of imports and is struggling to meet its external financing obligations. 

With a bleak short-term future, as the country faces an acute balance of payments crisis, Pakistan is desperate to secure external financing and the country’s citizens are looking for ways to alleviate the incoming recession.  

A weaker Rupee increases inflation and disrupts the currency’s purchasing power relative to higher-valued currencies such as the USD, GBP and AUD. However, the weaker Rupee has provided some benefits to Pakistanis overseas. For those working and living in countries with a high-value currency, they have the ability to get more value out of the remittances sent home - especially with Ramadan.   

As Pakistanis prepare for the impact of the depreciating rupee, it is even more important to keep a careful eye on personal finances. While Pakistanis overseas are able to maximize the value of the remittances sent home with favorable foreign exchange rates, for their recipients, managing those funds is key.

Ruzan Ahamed, Regional Director (SEA) of WorldRemit shared the below tips to help Pakistanis manage finances amidst today’s economic headwinds.  

1.     Spend wisely and support local  

With the increasing cost of importation, local consumers can strengthen the demand for local products. Pakistan has many positive stories of locally-made, high-quality products. If consumers make the conscious decision to support local instead of buying items from overseas, there is a higher chance for prices to decrease and become more competitive. 

2.     Plan ahead 

Next, prepare extra funds for expenses, as well as to save whenever possible. Staying ready for price hikes will help families maintain their lifestyles despite the uncertainty of the economy. On top of that, allotting a portion of one’s monthly earnings for emergency funds will be helpful should more dire, unexpected situations arise. For those in Pakistan, look for opportunities to generate foreign income as that will also help deal with inflation.  

3.     Use trusted digital financial services 

Lastly, consumers can utilize trusted digital financial service providers in order to keep track of and reach their financial goals. Leading players in the industry provide users with convenience and different opportunities to protect their money and savings - especially those involved in the Pakistani Remittance Initiative, where senders are able to take advantage of fee-free transactions when sending $100 USD or more.  

WorldRemit is a global payments company.