By Zubair Yaqoob
Pakistan’s economic debate often centres on exports, external borrowing, and the recurring challenge of balance-of-payments stability. Yet one important element of the country’s financial architecture receives comparatively little attention: foreign currency deposits held within the domestic banking system. In an economy that frequently faces exchange-rate volatility and external financing pressures, these deposits represent far more than a niche banking product. Properly mobilised, they can serve as a powerful stabilising pillar for Pakistan’s financial system.
The significance of foreign currency inflows is evident. Pakistan recorded a historic $38.3 billion in remittances during FY2024-25, the highest level ever received, reflecting the enduring financial connection between the country and its global diaspora. These flows have remained strong, with $19.7 billion arriving in the first half of FY2025-26 and monthly inflows touching roughly $3.6 billion in December 2025. Such numbers highlight the scale of foreign exchange that enters Pakistan through formal channels each year — and the importance of ensuring that these inflows remain productively integrated within the domestic financial system.
Foreign currency deposits therefore play a critical role in strengthening liquidity within Pakistan’s regulated banking sector. When held within domestic banks, they increase the availability of foreign exchange in the formal market, helping support exchange-rate stability and reducing the economy’s dependence on costly short-term external borrowing. Unlike portfolio investments that can reverse rapidly during periods of global financial turbulence, deposits originating from overseas Pakistanis, exporters, and internationally connected businesses tend to be relationship-driven and more stable in nature.
For businesses engaged in global trade, foreign currency accounts provide practical financial advantages. Importers and exporters can manage international transactions more efficiently, reduce repeated conversion costs, and plan cross-border payments with greater certainty. Service exporters and internationally connected enterprises similarly benefit from the ability to hold and deploy foreign earnings directly within Pakistan’s regulated banking framework.
For individuals — particularly overseas Pakistanis — foreign currency accounts offer something equally valuable: continuity of financial connection. These accounts allow members of the diaspora to maintain savings in globally recognised currencies while remaining integrated with Pakistan’s banking system. Institutions such as Faysal Bank have increasingly focused on strengthening this relationship by offering tailored foreign currency banking solutions designed to make it easier for customers abroad to manage their finances within Pakistan.
However, the long-term effectiveness of foreign currency deposits depends not only on their availability but also on their usability. Historically, such accounts in Pakistan have often functioned primarily as passive stores of value, allowing depositors to preserve funds in foreign currency but offering limited day-to-day functionality.
In today’s digitally connected financial environment, that model is rapidly becoming outdated. Customers increasingly expect foreign currency accounts to operate not merely as storage vehicles but as active financial instruments capable of supporting international payments, digital access, and seamless cross-border spending.
Forward-looking banks have begun responding to this shift. Faysal Bank, for instance, has focused on enhancing the practical usability of foreign currency accounts by integrating modern banking features that allow customers to access and utilise their funds more conveniently. One notable development is the introduction of foreign currency debit cards linked directly to FCY accounts, enabling international payments, convenient withdrawals, and easier management of overseas expenses.
Such innovations represent more than a simple product enhancement. By enabling customers to actively use their foreign currency deposits for everyday transactions, banks can help transform these accounts from dormant balances into dynamic financial tools. This shift is particularly important for encouraging depositors to keep their funds within Pakistan’s formal financial system rather than moving them to offshore accounts.
The broader lesson is clear. Foreign currency deposits should not be viewed merely as a temporary buffer during times of economic stress. Instead, they represent a strategic national asset capable of strengthening liquidity, deepening financial trust, and reinforcing Pakistan’s financial linkages with its global diaspora.
Realising this potential will require both a stable regulatory environment and continued innovation within the banking sector. As banks expand the functionality of foreign currency accounts — through digital platforms, payment solutions, and customer-centric services — they can help ensure that the foreign exchange entering Pakistan each year translates into lasting financial stability.
Institutions such as Faysal Bank illustrate how the banking sector can play a constructive role in this transformation. By turning foreign currency accounts into practical financial tools rather than passive repositories, the financial industry can help convert remittance inflows into enduring confidence in Pakistan’s economic future.
The writer is a senior investigative journalist with a career spanning 37 years on all the media formats. Zubair can be reached at zubairkidy@yahoo.com
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