The article discusses how the prolonged Gulf war has significantly reduced unofficial dollar inflows into Pakistan through hundi and hawala networks, which were previously a major source of unaccounted foreign exchange.

Small exporters and manufacturers, who relied on these informal channels, have faced severe challenges as Dubai's informal trading business collapsed.The war disrupted the flow of goods and people to the Gulf, impacting industries like embroidery that depended on Dubai markets.Now, these businesses are shifting focus to domestic markets, which account for only 10% of previous production.Additionally, the hundi/hawala system, though diminished, continues to face further erosion due to the war.

Meanwhile, crypto investments have diverted billions of dollars from the local market, with exchange rates for cryptocurrencies reaching Rs292 per dollar.

The State Bank of Pakistan has taken measures to curb dollar outflows while developing a regulatory framework for crypto trading, lifting an eight-year ban on crypto-related banking activities.

However, the exact volume of dollar inflows through informal channels remains unclear, highlighting the complex interplay between geopolitical conflicts, financial systems, and emerging technologies like cryptocurrencies.