KARACHI: The cumulative net investment in T-bills from July 2019 to date is now below $1 billion, standing at $951 million, according to data released by the State Bank of Pakistan (SBP).
Much of this divestment impact has to do with the trend of foreign outflows leaving the country that has continued unabated since late February 2020.
The total gross divestment during March 2020 stood at $1.735 billion, while gross divestment in April 2020 so far has reached $412 million.
Foreign investors divested $54 million worth of treasury bills (T-bills) on April 13, as per the Special Convertible Rupee Account (SCRA), which tracks inflows and outflows from foreign countries.
Previously, foreign investors divested $82 million worth of T-bills on April 8; divested $73 million worth of T-bills on April 6; and divested $48 million worth of T-bills on April 1.
This is the first time the cumulative net investment since July has stood at less than $1 billion since October 2019, where it stood at $441 million.
In fact, in the preceding eight months had seen positive inflows of varying amounts. Notable months include November 2019, which saw a monthly net investment in T-bills of $713 million, and January 2020, which recorded a monthly net investment of $1.413 billion.
That is how the cumulative net investment in T-bills comfortably climbed from $15 million in July 2019, to $3.099 billion in February 2020.
But in March, foreign outflows, or ‘hot money’ began to leave the country just as quickly as they had poured in, mostly due to investor worry about the COVID-19 outbreak.
The cumulative net investment in T-bills from July 2019 to March plummeted to $1.364 billion. It is expected to drop even further in the coming weeks, as foriegn outflows are expected to continue to leave.
The flight of money occurred even while the SBP was maintaining a generally high policy rate, at 13.25pc. But then the SBP cut the policy rate by 75 basis points to 12.5pc on March 17, and then just one week later on March 24, by 150 basis points, from 12.5pc to 11pc. The reduction in the policy rate is expected to further exacerbate foreign outflows.