KARACHI: Foreign investors pulled a massive $20 million from Pakistan’s domestic bonds in a single day following the outbreak of hostilities in the Gulf, highlighting rising nervousness in regional markets. Outflows during the first 13 days of the Iran war have already matched levels seen in 2020 after the Covid-19 shutdown.
Data from the State Bank of Pakistan shows that Pakistan, although not directly involved in the conflict, experienced a net outflow of $184.3 million in the first 13 days of March. By comparison, the country lost around $3.5–$4 billion in a few months during 2020 due to the pandemic.
So far, Pakistan has largely avoided major oil shocks and exchange rate instability, even as the Indian rupee depreciated to Rs94 against the US dollar from Rs88 before the Gulf conflict.
On March 13, US investors withdrew $20 million from domestic bonds. The largest outflows in the period came from the UK, which pulled $69.5 million. Overall inflows during the 13 days were minimal at just $19.3 million, originating only from the UK ($9.2 million) and Bahrain ($10 million). Meanwhile, Bahrain recorded $33.7 million in outflows, the second-highest after the UK.
Other notable withdrawals from T-bills between March 1–13 included Singapore ($27.5 million), the US ($27.3 million), the UAE ($15.4 million), and Australia ($9 million).
Reports indicate that only wealthy Pakistanis have left the UAE so far. Some Pakistanis are also moving from Karachi to Dubai in search of jobs, believing that vacancies left by others are now available in the Gulf. Despite the turmoil, remittance inflows have remained steady, suggesting that Pakistanis working in the Middle East are not panicking amid escalating regional tensions.
