Foreign investors pull $165 million from Pakistan T-bills as geopolitical risks, oil surge weigh on sentiment

Foreign investment in Pakistan’s short-term government securities turned negative in March, with Treasury bills (T-bills) recording net outflows of $165.1 million by March 13, compared to inflows of $31.2 million in February, according to State Bank of Pakistan (SBP) data.

Overseas investors injected $19.257 million into T-bills during the period but withdrew $184.347 million, reflecting a shift in investor behaviour amid rising geopolitical risks and higher global oil prices.

SBP data showed that investment from the United Arab Emirates dropped to zero by March 13, with divestments of $15.432 million recorded during the period. Investments from Bahrain stood at $10 million, while withdrawals reached $33.723 million.

Foreign investors have invested $886.7 million in T-bills so far in the current fiscal year but have withdrawn $751 million, indicating volatile participation in the local debt market.

Global energy markets have been affected by the ongoing conflict in the Middle East, with Brent crude rising by 8% to $116 per barrel and overall crude prices increasing by about 60% since February 28.

Pakistan’s dollar-denominated bonds have also faced volatility, with Eurobonds posting losses of over 5% since the escalation of conflict in Afghanistan at the end of February, according to Bloomberg.

Pakistan and Afghanistan have announced a temporary halt in hostilities during Eidul Fitr following weeks of fighting, but market uncertainty linked to regional tensions continues to affect investor flows.