Foreign investors buy USD 81.2 million in Pakistan T-bills through October 23

Foreign investors purchased a net USD 81.2 million worth of Pakistani treasury bills (T-bills) during the first 23 days of October 2026, marking the strongest reported monthly inflow since January, according to State Bank of Pakistan (SBP) data cited by market analysts.

The purchases helped reverse net foreign outflows from short-term government securities recorded during the first three months of the current fiscal year.

Which countries accounted for October's T-bill inflows?

The United Arab Emirates accounted for the largest share of net T-bill purchases at USD 49.7 million, followed by the United Kingdom with USD 17.8 million and Bahrain with USD 13 million. Together, the UAE and Bahrain contributed approximately 77% of the total, highlighting the concentration of inflows among Gulf investors.

Saad Hanif, head of research at Ismail Iqbal Securities, warned that the concentration left foreign investment vulnerable to shifts in regional sentiment and geopolitical developments, particularly amid the ongoing Middle East conflict.

How much foreign investment has government debt attracted in FY27?

Net foreign investment in treasury bills reached USD 63.9 million during the current fiscal year through October 23, reversing net outflows of USD 17.3 million recorded during July–September. Foreign investors also purchased a net USD 210.3 million in longer-term Pakistan Investment Bonds (PIBs) during the fiscal year.

Combined net foreign inflows into T-bills and PIBs consequently reached approximately USD 274 million in FY27 through October 23.

The larger cumulative inflow into PIBs indicates that foreign investment has also been directed toward longer-term government securities, although the figures alone do not establish investors' motivations.

How do interest rates and inflation affect the outlook?

The SBP raised its benchmark policy rate by 50 basis points to 12% on October 26, effective October 27, citing inflationary risks from higher global oil prices amid the Middle East conflict. The decision came after the October 23 cutoff for the reported investment figures.

Meanwhile, annual consumer inflation eased to 9.6% in October from 10.3% in September, leaving a difference of approximately 2.4 percentage points between the new policy rate and the latest inflation reading.

The combined USD 274 million in net foreign government debt inflows represents approximately 1.3% of the SBP's foreign exchange reserves of USD 21.5 billion as of October 23.

Hanif said the inflows were a positive signal for investor confidence but cautioned that their relatively small size and potential volatility meant they should not be relied upon as a dependable source of external financing.