KARACHI: In the first week of November, outflows were four times greater than inflows, causing a steep decline in foreign investments in treasury notes, or T-bills.
With withdrawals rising to $46 million versus an inflow of $10.5 million during the first week of this month, data provided by the State Bank of Pakistan (SBP) on Thursday indicated that international investors had lost interest in domestic bonds.
Due to improvements in key indices, the administration asserts that the economy is recovering. Nonetheless, there are a few explanations for the decline in interest in domestic bonds.
According to several financial experts, the primary reason why international investors withdrew their funds from Pakistan was the declining returns on domestic bonds.
Some, however, believed that one of the main reasons why investors waited for the dust to settle was the unpredictability of the political climate. Islamabad is being blocked off once more to prevent demonstrators from entering the nation’s capital.
According to the breakdown, during November 1–8, there was an inflow of $5.3 million from the UK, $5 million from the UAE, and $0.26 million from the US.
But during the week, investors from the UK withdrew $41 million and those from the UAE withdrew $5 million, causing a significant outflow that altered the entire balance sheet.
According to senior banker Rashid Masood Alam, “news of friendly countries like China, Saudi Arabia, and the UAE’s apparent unwillingness of debt rollovers cast doubt on Pakistan’s abilities to attract any FDI or foreign investment flow in the bond market as usually when these decisions are delayed, chances of dollar appreciation increase which results in loss to investors.”
The T-bill has had $417 million in withdrawals and $717.7 million in total inflows of foreign investors since July 1.
SBP reserves increase
The central bank said Thursday that the SBP’s foreign exchange reserves climbed by $29 million to $11.29 billion in the week ending November 15. The total amount of the nation’s reserves, which included $4.67 billion held by commercial banks, was $15.96 billion.
