Karachi: Foreign investment in Pakistan’s treasury bills (T-bills) rose sharply in October, reaching USD 118.6 million, the highest monthly inflow so far in the current fiscal year (FY26), according to data released by the State Bank of Pakistan (SBP).
Between July and October FY26, total foreign inflows into T-bills amounted to USD 333 million, while outflows during the same period stood at USD 213 million, SBP data showed.
The United Arab Emirates (UAE) emerged as the dominant investor in October, contributing USD 112.5 million, followed by Bahrain with USD 63 million, the United Kingdom with USD 9.6 million, and the United States with USD 47.6 million. The data indicates that Arab states were the primary contributors to the latest surge in inflows.
Analysts attributed the rise to improved investor sentiment driven by stabilising economic indicators, regional engagement, and favourable returns on Pakistan’s short-term government securities. They noted that the country’s one-month to one-year T-bills currently offer yields around 11%, significantly higher than those in many other emerging or developed markets.
Market experts said the renewed interest from Gulf nations reflects a broader revival in portfolio investment as Pakistan strengthens its diplomatic and trade ties in the region. Recent developments, including a defence cooperation pact with Saudi Arabia, the Gaza ceasefire, and a Saudi investment delegation’s visit, have also helped reduce geopolitical uncertainty.
While analysts welcomed the positive inflow trend, they cautioned that net foreign investment in government securities remains modest. Sustained inflows, they said, could help improve market liquidity and signal growing investor confidence if macroeconomic stability continues.
They also pointed out that some Pakistani firms have recently relocated operations to Dubai, citing high domestic electricity costs and weak internet infrastructure, underscoring the need for improved competitiveness to retain and attract capital.
Economists say the continued participation of foreign investors in the T-bill market may offer short-term relief to Pakistan’s balance of payments and help stabilise the rupee, though long-term recovery will depend on structural reforms and consistent policy measures.
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