The State Bank of Pakistan (SBP) reported a significant increase in foreign investments in equities and treasury bills (T-bills) for January, reaching $98 million.
This marks an increase from December 2023’s $65 million, indicating growing investor interest in Pakistan’s financial markets.
Investments in equities accounted for $67 million of the January total, facilitated through the Special Convertible Rupee Account (SCRA), maintaining a bullish market trend for the second consecutive month.
December 2023 had seen equity investments alone at $65 million, contributing to a half-year total of $204.8 million in foreign investments.
With an additional $16 million in T-bills for the same period, the cumulative investment under SCRA reached $222 million.
January also saw a rise in T-bill investments to $30.6 million, attributed to a higher cut-off yield of approximately 21 percent, which proved attractive to foreign investors.
Despite these positive trends, experts express caution due to political uncertainties and economic challenges facing the country.
The recent general elections have added to these uncertainties, especially concerning the formation of a new government and its impact on investment stability.
Bankers view the SCRA inflows as a positive development for Pakistan, suggesting that a stable government in Islamabad could further boost investor confidence.
The total SCRA inflows for the first seven months of the current fiscal year amounted to $324 million, with $277.2 million in equities and $46.7 million in T-bills.
The backdrop of these developments includes a previous high of up to $5 billion in SCRA funds for domestic bonds before the Covid-19 pandemic, followed by a rapid withdrawal of over $4 billion by foreign investors at the pandemic’s onset.
The SBP and government’s efforts to maintain a stable exchange rate over the past two months are also noted as a positive indicator for potential investors.
The dollar’s exchange rate stood at Rs282.23 in the open market and Rs279.56 in the interbank market as of the last report.
These inflows have played a role in supporting the SBP’s foreign exchange reserves, which are currently maintained at $8 billion.
