KARACHI: Although domestic bonds offered enticing returns of up to 16 percent, the net outflow in the first month of the current fiscal year was only a little over $28 million.
The State Bank of Pakistan (SBP) revealed on Monday that only $3 million in treasury bills were brought in while $31.085 million were taken out. The United Kingdom accounted for both the inflows and outflows, which was indicative of the subpar performance of the domestic bonds.
Foreigners were permitted to invest in local bonds prior to the pandemic in 2020, which garnered an immediate $3.5 billion. However, the majority of the investments departed the country when the country was hit by Covid-19, and since then no sizable foreign investment has returned to domestic bonds.
In June, the final month of FY22, $22 million was invested in T-bills while $62.8 million was withheld. However, during the month, there was no interest from international investors in Pakistan Investment Bonds (PIBs).
Investor confidence was affected by the regime change in Islamabad as well since the political unrest that followed had a negative impact on the environment for investments.
Due to the extremely unsettling political climate, no foreign investment in T-bills and PIBs was made during the two months of March and April; instead, sizable withdrawals were made. The nation received $9.9 million on May 6 after a nearly two and a half month hiatus.
Although the risks associated with unpredictable political instability prevented foreign investors from making investments during the fiscal year FY22, there were over $1 billion in outflows from domestic bonds despite the favourable yields.
