Lahore: Pakistan’s bond market has become a profitable option for foreign investors; with sovereign bonds recently having attracted an unprecedented inflow of foreign capital — and international investors having purchased one-year bonds worth $642 million in November alone, according to a report issued by the State Bank of Pakistan (SBP).
The central bank, while applauding the development, also stressed on the need to retain the investments for a long period. SBP Governor Reza Baqir, during a media briefing, stated that the strategy on this front was to create deeper pockets along the yield curve. He explained that having ‘deeper segments means that these instruments become more attractive to non-residents as well because they (the non-residents) want turnover in the secondary market’.
The strategy being developed is expected to help ease Pakistan’s economy that is currently marred with high debt ratio, weak growth and low foreign currency reserves.
The central bank, in recent period, has more than doubled its policy rate to 13.25pc – the highest in Asia – to help stabilise the economy; with foreign inflows in bonds expected to reach a record USD 3 billion by the end of the fiscal year.
