Foreign exchange is a strategic lifeline that links Pakistan to the global economy. From remittances sent by overseas workers to payments for international trade, from currency purchases for education and travel, to the financial flows that underpin investment and development; foreign exchange touches every facet of national life.

It is the mechanism through which families sustain themselves, businesses grow, and the country asserts its place in the global financial system.

However, the strength of this mechanism depends not only on volume, but on the integrity of the channels through which it flows.

Foreign exchange is like the circulatory system of a developing economy. Just as blood carries oxygen and nutrients to every part of the body, foreign currency flows bring essential resources like technology, machinery, raw materials, and expertise that local production cannot yet provide.

Without adequate foreign exchange, the economy suffers from “anaemia,” unable to import what it needs to grow and develop.

Roshan Digital Account (RDA) is a great example of the potential that our incoming remittances have.

Millions of overseas Pakistanis send remittances, ensuring that their families live with dignity and their homeland can stay economically afloat.

These remittances, often modest amounts saved with great effort, collectively become a river of lifeblood for Pakistan’s economy.

However, for decades, a substantial amount of this flow gets diverted into the shadows of informal networks that thrive on convenience but strip transactions of transparency and security.

I refer to the practice of ‘hundi’ and ‘hawala,’— still seen by some as familiar and harmless, but beneath its surface lie risks that affect not only individual households but the entire national fabric.

Money lost to unreliable operators, funds entangled in illicit networks, and the erosion of Pakistan’s financial credibility are costs too heavy to bear in a world where economic stability is as important as political sovereignty.

The alternative lies in the formal system, where initially exchange companies ensured that every dollar, dirham, or pound remitted was accounted for, but it gradually spread into a rather informal system where no compliance with the regulatory checks created many irregularities.

To curb malpractices, the State Bank of Pakistan (SBP) allowed the banks to establish exchanges as part of their operations, enabling not only their customers but the public at large to have a clean and accurate exchange facility.

These institutions operate under the watchful eye of the SBP, offering not only safety and accountability but also a promise that the sacrifices of overseas workers will reach their families intact, and that each transaction will contribute to the stability of the country’s reserves.

These licensed exchange companies also play a central role in curbing illicit financial flows, dismantling the very networks that have long drained resources into the black economy.

Every remittance that travels through formal channels is a step toward compliance with global standards, a reassurance to international partners, and a reinforcement of Pakistan’s standing in the world economy.

Licensed exchange companies operate within a framework that aligns Pakistan with global financial standards, including anti-money laundering (AML), counter-terrorism financing (CTF), and know-your-customer (KYC) protocols.

In an era of heightened scrutiny, this alignment is essential for maintaining access to global financial systems and attracting foreign investment.

They are indispensable facilitators of international trade, enabling businesses to settle cross-border transactions with confidence and clarity.

Whether it is a textile exporter receiving payments from Europe or a manufacturer importing essential components from East Asia, regulated foreign exchange services ensure that these transactions are executed at official exchange rates, with full documentation and compliance.

In doing so, they support the backbone of Pakistan’s economy, which is the trade sector and help local enterprises compete globally.

The digital transformation of foreign exchange services has further enhanced their reach and reliability.

These innovations not only improve user experience but also strengthen compliance through biometric verification, automated reporting, and AI-driven fraud detection.

The result is a system that is not only efficient but also resilient against misuse. Beyond that, these companies extend financial inclusion to citizens who were previously excluded, giving rural families, small businesses, and first-time account holders access to secure, documented services that build trust in the formal banking system.

Commercial banks have risen to this challenge by making foreign exchange more accessible, reliable, and trustworthy.

Their exchange companies combine the credibility of established financial institutions with the convenience of open market services.

Beyond regulatory strength and compliance, bank-owned exchange companies also offer unmatched convenience.

Customers are able to complete their foreign exchange needs under the same roof as their routine banking, without the risks of carrying cash or moving between different operators.

This integration makes the process seamless and secure, further encouraging individuals and businesses to rely on formal channels.

At the same time, these companies play a vital role in the broader financial system by surrendering their inflows to the interbank market.

By increasing the supply of foreign currency in formal circulation, they help stabilise liquidity, deepen the interbank market, and promote stability in exchange rates.

In this evolving landscape, the growth of Sharia-compliant exchange services has brought a powerful new dimension.

Institutions such as Faysal Bank have taken a lead, extending their full Islamic banking infrastructure into the realm of foreign exchange trade.

Faysal Islami Currency Exchange Private Limited (FICEC), launched in 2024 as part of Faysal Bank Group, reflects this evolution.

Licensed by the State Bank of Pakistan, FICEC specialises in foreign currency exchange with a focus on competitive rates and seamless transactions.

By integrating Sharia-compliant principles with modern technology, it caters to diverse customer needs while ensuring compliance and transparency.

This allows individuals and businesses to meet their cross-border needs with confidence that their transactions are both secure in practice and ethical in principle.

The writer is a freelance journalist. He tweets @AliOusat