COVID-19 resurgence in Pakistan: Foreign investors pull out $471.7mln from debt market
Foreign investors pulled out $471.7 million from Pakistan’s debt market in five months as lower interest rates and spike of COVID-19 weighed down their investment appetite, media reports said, quoting central bank’s data.
Analysts told The News International the continued hot money outflows from the local fixed income market indicates that the low-yielding government debt has become less attractive for foreigners with the State Bank of Pakistan (SBP) having slashed policy rates by 625 basis points to 7 percent since mid-March.
“The withdrawal could be because rates are close to all-time lows and are not lucrative enough for investors,” said Saad Hashemy, executive director at BMA Capital. “Increase in rates will result in losses and maturing investment is not being rolled over as foreign investment in the local bond market started late last year.”
The SBP’s data showed that foreigners became net sellers of $266.1 million worth of the treasury bills and investment bonds during the period under review, the newspaper reported.
Analysts said the central bank seems reluctant to tighten monetary policy till the first quarter of next year to help revive lockdown-battered economic growth. They expect a gradual 1 to 2 percent rise in interest rates till June.