Pakistan's external accounts improved in August, mainly because of remittances. According to the State Bank of Pakistan (SBP), the current-account deficit fell to $98m in August 2026, down from $445m in July and $324m in August 2025. Money sent home by Pakistanis working abroad offset most of a widening gap in trade in goods and services.

Remittances rose sharply. Workers' remittances reached $3.66bn in August, almost 17% more than the $3.14bn received a year earlier.

Trade continued to put pressure on the external accounts. Exports of goods and services rose by more than 5% to $3.33bn from $3.17bn, while imports increased by more than 8% to $6.64bn from $6.15bn. The deficit in goods and services therefore widened to about $3.31bn, from roughly $2.98bn a year earlier.

The figures for the first two months of the fiscal year are better. The cumulative current-account deficit for July-August FY27 was $543m, 36% lower than the $853m recorded in the same period last year.

The central bank's reserves have also increased. Excluding banks' required reserves (CRR/SCRR), the SBP's foreign exchange reserves stood at $17.28bn, 19% higher than a year earlier, although the current account remains under pressure.

The value of the rupee in trade terms changed little. The real effective exchange rate (REER) rose by 0.02% to 107.92 in August from 107.89 in July. The nominal effective exchange rate (NEER) fell by 0.79% to a provisional 38.02 from 38.32.

The REER measures the price of a basket of goods in Pakistan compared with the same basket in its main trading partners, converted at market exchange rates and weighted by trade shares. A reading above 100 suggests that exports are less competitive and imports cheaper, while a reading below 100 indicates the reverse.

The August figures show that Pakistan's current account depends heavily on remittances. Imports continue to grow faster than exports, and a REER close to 108 suggests that exporters still face a competitiveness disadvantage. Without the money sent home by overseas workers, the deficit would be much larger.