Pakistan Attracts Highest Foreign Investment in T-Bills Since 2020

Foreign investors parked a significant $148.6 million into T-Bills in the first 25 days of May, the highest since 2020.

Moreover, in the current fiscal year to date, the debt-ridden nation has seen a significant net flow of $300.5m in T-Bills through Special Convertible Rupee Accounts (SCRA), latest State Bank of Pakistan (SBP) data showed.

This surge in investment comes as the country continues to experience growing confidence amidst improved economic conditions and a stable exchange rate.

Furthermore, foreign investors have also capitalized on higher interest rates ahead of the SBP's recent policy decision.

To note, these bonds offered attractive returns of 21% for three-month and six-month papers, and 20.1% for 12-month papers, payable in Pakistani rupees (PKR).

On June 10, 2024, the central bank slashed the policy rate by 150bps to 20.5%.

The return on T-bills is now down to 20.15% (-85bps) for 3 months, 19.97% (-103bps) for 6 months, and 18.95% (-115bps) for 12 months.

SCRA allows foreign persons, institutions, and non-resident Pakistanis to invest into various instruments such as equities, government bonds, and TFCs.

Under this scheme, the funds are converted into Pakistani rupees and credited to the depositor's "Special Convertible Rupee" account.