Nearly 90 percent of foreign investment in Pakistan’s domestic bonds has exited, according to the latest data released by the State Bank of Pakistan, highlighting growing investor caution amid global uncertainty.
During the first nine months of FY2026, foreign inflows into government securities reached $886.7 million, while withdrawals surged to around $794 million. This has left only about $93 million in net investment, meaning most of the previously parked funds have already been pulled out.
Despite treasury bill yields rising to around 11.5 percent, the ongoing Gulf conflict has overshadowed potential returns and reduced foreign appetite for Pakistani debt instruments.
The outflows themselves may not immediately destabilize the market, but analysts warn that a bigger concern lies in external deposits held by friendly countries. The United Arab Emirates is reportedly hesitant to roll over a $2 billion deposit maturing soon, while similar uncertainties surround deposits from China and Saudi Arabia.
If these deposits are withdrawn or not renewed, Pakistan’s foreign exchange reserves could come under significant pressure. According to SBP projections, about $5.3 billion in external payments, including bonds and deposits, is due in the near term.
Recent data shows that in March alone, around $227 million exited treasury bills compared to just $19 million in fresh inflows. The largest outflows came from the United Kingdom ($281 million), followed by the UAE ($209 million), Bahrain ($170 million), Singapore ($77.6 million), and the United States ($32 million).
Economists caution that continued outflows, combined with external repayment obligations, could increase pressure on the currency and complicate efforts to maintain financial stability.
