KARACHI: In the first week of September, foreign investors poured a record $55 million into short-term treasury notes, despite repeated steep declines in the cut-off rates across all tenors.
August’s inflows were disappointing, but things took a turn for the better at the beginning of this month.
According to Tresmark CEO Faisal Mamsa, “some of the good reasons are the macroeconomic stability which compels foreign investors to look towards Pakistan for better returns.”
According to figures from the State Bank of Pakistan, foreign investors made $55.332 million in the first week of this month, with $28.624 million coming from Bahrain and $26.707 million from the UK being the two biggest inflows.
Foreign investors find the 17.47pc return on the three-month Treasury bills quite appealing, primarily due to the US Federal Reserve’s recent interest rate reduction and the fact that returns on bonds in industrialized nations are substantially lower than those on Pakistani bonds.
“The interest rate is dropping, the exchange rate is steady, inflation could continue to decline, and the current account deficit in the first two months of FY25 is just $171 million. Foreign investors are drawn to this economic stability, according to Mr. Mamsa.
According to financial analysts, approving a new IMF loan will help stabilize the economy even further and draw in more foreign capital.
Just $3.317 million was taken out of T-bills during the first week of this month. Experts are persuaded that greater inflows are anticipated in the upcoming weeks and months after inflows hit $386.7 million in the current fiscal year.
“Foreigners would like to invest more in Pakistan if the current account remains low or positive and debt servicing remains under control,” a top banker stated.
The banker stated, “Pakistan has a more stable economy than Turkiye, Egypt, Sri Lanka, and other developing economies, but our current return on T-bills is not the highest among them.” He also mentioned that in order to attract more foreign investments, political unrest must be resolved.
