Current account surplus shrinks

ISLAMABAD: Pakistan’s current account surplus narrowed in May 2026 as higher imports outweighed support from remittances and services exports, according to data released by the State Bank of Pakistan.

The SBP figures showed a current account surplus of $255 million in May, down from $459 million in April and lower than the stronger monthly surpluses recorded through much of the fiscal year. Even so, the country remained in surplus during July-May of FY26, with the cumulative current account balance standing at $1.62 billion.

Trade gap widens as imports rise

The moderation in the surplus came mainly from a wider trade deficit as imports continued to grow faster than exports. During the first 11 months of FY26, goods imports rose 8% year-on-year to $58.46 billion, while goods exports fell 5% to $28.25 billion. This pushed the goods trade deficit to more than $30.2 billion in July-May.

The broader deficit in goods and services reached $32.21 billion during the same period, compared with $27 billion a year earlier. The data indicated that stronger industrial activity and easier import restrictions were contributing to greater demand for foreign goods and raw materials, although the rise in imports also added to pressure on external financing needs.

Remittances continue to support external account

Record remittance inflows continued to provide the main cushion for the external sector. Workers’ remittances rose to $38.11 billion in July-May FY26, more than $3 billion higher than in the corresponding period last year. Total secondary income inflows, largely made up of remittances, reached $40.11 billion.

Services exports also posted growth, increasing to $9.1 billion in July-May FY26 from $7.75 billion a year earlier. The expansion was supported by information technology and business services exports. Telecommunications, computer and information services exports amounted to $4.18 billion during the period, according to the data.

At the same time, the primary income deficit, which includes profit repatriation and interest payments abroad, remained high at $7.65 billion during July-May FY26 and continued to weigh on the overall external account.

Reserves and investment inflows improve

Despite the narrower monthly surplus, the country’s foreign exchange reserves strengthened further. State Bank reserves, excluding mandatory reserves held by commercial banks, rose to $17.27 billion by the end of May from $11.62 billion a year earlier. The improvement was supported by multilateral financing, bilateral inflows, remittances and portfolio investment.

The balance of payments data showed net foreign direct investment of $1.62 billion during July-May FY26, while portfolio investment posted net inflows of $1.14 billion.

Rupee edges up, gold rises

In the inter-bank market on Wednesday, the rupee gained 0.01% against the US dollar, closing at Rs278.27 after improving by Rs0.03 from Tuesday’s rate of Rs278.30.

Gold prices also moved higher in the local market in line with international prices. The price of gold per tola rose by Rs100 to Rs455,236, while 10-gram gold increased by Rs85 to Rs389,685, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association. The association had not announced gold and silver rates on Tuesday after calling for protest against alleged raids on jewellery shops.

On Monday, gold per tola had climbed to Rs455,136 after a sharp increase of Rs10,800. In the international market, gold rose by $1 to $4,328 per ounce, while silver fell by Rs6 to Rs7,503 per tola.