KARACHI: Total gross divestment during March 2020 has reached $1.406 billion, according to data released by the State Bank of Pakistan (SBP), in an expected trend of foreign outflows leaving the country due to the COVID-19 outbreak.
Foreign investors divested $92 million of treasury bills (T-bills) on March 20, as per the Special Convertible Rupee Account (SCRA), which tracks inflows and outflows from foreign countries.
The net investment in T-bills from July 2019 to date now amounts to $1.69 billion, compared to the $1.98 billion it had been just one week prior.
The last two weeks had seen a significant amount of money leave the country. Foreign investors divested $47 million of T-bills on March 17 and $222 million net worth of T-bills on March 13.
On March 12, foreign investors divested $166 million of T-bills; on March 11, foreign investors divested $251 million net worth of T-bills, while on March 10, foreign investors divested $136 million of T-bills.
This is part of a general pattern of divestment that started in late February, as foreign investors divested $67 million of T-bills on February 28, and divested $103 million net worth of T-Bills on March 3.
In the monetary policy announcement on March 17 at the State Bank, Dr Reza Baqir said globally, because of coronavirus, there has been a general ‘flight to safety’, that was not linked to whether the SBP significantly changed its policy rate or not.
The SBP cut the policy rate by 75 basis points on March 17, from 13.25pc to 12.5pc, and then by an additional 150 basis points to 11pc on March 24.
Previously, the SBP said that they had enough reserves to cover the magnitude of risks, and the buffers would be more than enough to cope with any portfolio outflows in an orderly manner.