Pakistan bonds see $184 million outflow in 13 days as Gulf conflict triggers investor exit

Pakistan recorded net foreign outflows of $184.3 million during the first 13 days of the Iran war, with investors withdrawing funds from domestic bonds amid regional tensions, according to the data released by the State Bank of Pakistan.

Around $20 million was pulled from domestic bonds on March 13 alone, reflecting investor caution despite Pakistan not being directly involved in the conflict.

The largest withdrawals during the period came from the United Kingdom, which accounted for $69.5 million in outflows. Bahrain followed with $33.7 million, while other notable exits included $27.5 million from Singapore, $27.3 million from the United States, $15.4 million from the UAE and $9 million from Australia.

Total inflows during the same period remained limited at $19.3 million, with $10 million coming from Bahrain and $9.2 million from the United Kingdom.

The scale of outflows during the initial phase of the conflict is comparable to capital movements seen during early 2020 following the Covid-related market disruption, when Pakistan experienced multi-billion-dollar withdrawals over a short period.

So far, Pakistan has not faced significant pressure on the exchange rate or oil-related shocks, although regional currencies such as the Indian rupee have weakened during the period.