Pakistan recorded its largest monthly net foreign inflows into sovereign bonds in 19 months, totaling $176 million in January, according to Bloomberg. Data from the State Bank of Pakistan (SBP) shows that this marks a significant turnaround from net outflows of $50 million in January of the previous year. Around 85 percent of the inflows were directed toward short-term government bonds with maturities of one year or less, reflecting investor preference for liquidity and lower-risk instruments.
The surge in bond inflows coincides with a sustained recovery of the Pakistani rupee, which has rebounded from its July lows and is on track to register gains against the US dollar for the eighth consecutive month. Market analysts attribute the renewed foreign participation to currency stability, favorable macroeconomic indicators, and confidence in policy continuity. BMI, a unit of Fitch Solutions, expects policymakers to maintain the rupee at around 280 per US dollar in 2026, supporting investor confidence.
Government officials have highlighted currency stability, strengthening external balances, and consistent economic policies as key factors driving renewed foreign interest in Pakistan’s debt markets. The record inflows are expected to reinforce fiscal stability, improve market liquidity, and signal positive sentiment toward Pakistan’s financial markets among international investors.
