On Monday the State Bank of Pakistan issued a statement on the recent inflation in the cut-off yield, the Pakistan Investment Bonds [PIB] had acquired over $12.7 million foreign investment in the first week of this month helping Pakistan’s external account to improve its reserves.
According to reports the government has long been acquiring through PIB’s and has increased the cut-off yield by up to 42 basis points since February 27th.
For three years through PIB’s the cut-off yield ascended to 9.41 percent, 9.9 percent for five years, and 10.05 percent for 10-year bonds.
Since the Covid-19 pandemic outbreak in March 2020 for the first time, the foreign investments in domestic bonds crossed the accruing figure of $150 million.
Although, this time around the outflow from PIB’s was somewhat negligible as it was just $0.3 million during this current fiscal year. PIB’s inflows started in November 2020 and have been still increasing. The latest inflation in the PIB’s rates rose the real interest rate, making the investment more appealing.
Accruing to the SBP’s date it shows that the entire amount of $12.7 million invested in PIB’s came from the US. The Federal reserve’s interest rate is at the lowest level 0.25 percent which might be one of the reasons for the higher investment from the US. PIB’s had a total inflow of $150.3 million from which $104 million investments solely came from the states.
As the foreign inflows of treasury bills and the equity market are in the process yet the outflows are rising higher.
The total inflows in treasury bills during this current fiscal year have amounted to $424.2 million while the outflows were $628.2 million.
And before the pandemic, the total inflows of treasury bills were $3.5 billion.
Banks and other investors have collectively invested more than $14 trillion in the PIB’s. Although it cannot be ascertained which tenure lured the most of the investments.