T-bills attract record inflows in over four years

The first month of the current fiscal year saw a record foreign investment of $258.3 million in treasury bills (T-bills) after January 2020. The latest data released by the State Bank of Pakistan (SBP) on Wednesday showed that inflows exceeded the previous monthly high of $230m recorded in May. However, the inflows were far less than the $1.4bn invested in T-bills and Pakistan Investment Bonds in January 2020. The trend was disrupted as foreigners withdrew their investments promptly after the outbreak of Covid-19 the same year. The T-bill inflows result from a stable exchange rate and high returns on domestic bonds. Despite a 100 basis point interest rate cut on July 29, the returns are still much higher than in other developing economies. Foreign investors borrow at lower rates from foreign banks to invest in Pakistan and earn more than double the returns.