Foreign divestment in T-bills reaches $607m

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KARACHI: Total gross divestment during March 2020 reached $606.5 million, according to data released by the State Bank of Pakistan (SBP).

Foreign investors divested $251 million net worth of treasury bills (T-bills) on March 11, as per the Special Convertible Rupee Account, which tracks inflows and outflows from foreign countries.

The net investment in T-bills from July 2019 to date amounts to $2.493 billion.

Previously, foreign investors divested $136 million of T-bills on March 10, with total gross divestment in March up until that point, reaching $356 million.

It is expected that by the end of this week, T-Bills outflows from the SCRA will reach anywhere from $700 million to $800 million during March to date.

This is part of a general pattern of divestment that started in late February. Foreign investors divested $67 million of T-bills on February 28 and divested $103 million net worth of T-Bills on March 3.

The divestment on March 3 was particularly significant, because it represented the first time there had been net selling in eight months.

According to analysts, the hot money outflows are likely to cause another round of rupee depreciation and is likely to cause another round of inflationary pressure.

The outflows are connected to the ongoing oil war between Saudi Arabia and Russia due to the COVID-19, or coronavirus outbreak. Previously, Samiullah Tariq, director at Arif Habib Ltd, said that there has been a general flight towards safety out of fears of a recession linked to COVID-19.

“Foreigners are selling their T-bills from places like Pakistan and India, and instead are investing in Japan or the US,” he said

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