KARACHI: The new calendar year began with record foreign investment in domestic bonds, as inflows into treasury bills during the first 16 days of January crossed $114 million.

Latest data released by the State Bank of Pakistan showed the country received a record-high inflow in January, the largest monthly inflow recorded over the past six and a half months.

However, foreign direct investment (FDI) declined sharply during the first half of the current fiscal year (FY26), falling 43pc to $808m from $1.425bn in the same period last year.

Despite a booming equity market, foreign investors preferred T-bills, while the stock market continued to witness net foreign outflows during the six and a half months under review.

Data showed that during the first 16 days of January, inflows into T-bills amo­unted to $114.7m, while outflows stood at $18.5m. In contrast, the equity market saw inflows of just $17m against outflows of $61.5m during the same period.

Strong inflows attributed to stable exchange rate

During the first six and a half months of FY26, total inflows into T-bills reached $625m, while outflows amounted to $408m. Over the same period, equity market inflows stood at $164m, compared to outflows of $459m.

Financial experts attributed the strong inflows largely to a stable exchange rate, which boosted investor confidence in repatriating profits and capital amid expectations of limited movement in the dollar rate.

The highest inflow during the first 16 days of January came from Bahrain at $48m, followed by Singapore with $28m, the UAE with $15m and the UK with $13m.

Compared to the buoyant stock market, inflows into T-bills remained significantly higher despite a decline in T-bill rates during the last two auctions held this month.

The State Bank slashed T-bill rates by up to 31 basis points in the auction held on Jan 21. Yields on one-month papers were cut by 31bps to 9.8pc, three-month papers by 26bps to 9.89pc, six-month papers by 22bps to 9.94pc, and 12-month papers by 16bps to 10pc.

In the previous auction held on Jan 8, cut-off yields were reduced by 29bps, 34bps, 32bps and 33bps for one-month, three-month, six-month and 12-month papers, respectively.

As a result, T-bill rates are now largely in single digits, except for the 12-month paper, which carries a yield of 10pc.

Some experts partly attributed the high inflows to perceived macroeconomic stability. Faisal Mamsa, CEO of Tresmark, said Pakistan appeared stable on the surface, with inflation declining, foreign exchange reserves improving, a steady exchange rate and the KSE-100 index nearing 190,000 points.

However, he noted that economic growth remained the weak link, with the cost of doing business around 34pc higher than regional peers and exports remaining stagnant.

“Pakistan’s economic indicators in 2025 reflected a broad-based recovery, supported by easing inflation, improving macroeconomic stability, and a strong rebound in domestic demand,” said a research report by Topline Securities.

On the macroeconomic front, inflation fell sharply to an average of 3.5pc, enabling monetary easing. The report cited declining six-month T-bill yields, record expected remittances of $40bn, improving foreign exchange reserves and 10pc growth in large-scale manufacturing as factors underpinning economic resilience.

Published in Dawn, January 25th, 2026