T-bills, equity see record inflows in FY24
KARACHI: The inflow for treasury bills has set a new record as it jumped by $232 million during the first 21 days of June while the net inflow in the equity market has reached a 10-year high.
The latest data of the State Bank shows the inflows suddenly picked up pace in the last quarter of FY24 (July 2023-June 2024), with June alone bringing in a whopping $232m during the first 21 days.
Such hefty inflow was seen only once before — in 2020 at the peak of Covid-19 outbreak. Total inflows during FY24 stand at $706.4m, including the $232m received till June 21.
“This is all because of high returns on t-bills and exchange rate stability,” said Tahir Abbas, the head of research at Arif Habib Limited.
Net inflow into equity at 10-year high; June receives $232m in T-bills
“The outlook of exchange rate is stable since talks with the IMF are moving in the right direction and hopes for a new agreement are high,” according to Mr Abbas.
He said if the IMF talks turn out to be successful, inflows from other sources would get a boost. “This would be good news for the exchange rate.
“If there is no depreciation of rupee, the 20 per cent return on t-bills is the highest in the developing world,” he said.
Tahir Abbas estimated the three-month paper would pay 6.5 per cent to investors — an annual return of 20 per cent.
The government has succeeded in reducing the current account deficit (CAD) to $464m during the first 11 months of FY24. Analysts believe the government would not face as much pressure on the CAD front next year as in the recent past. This will help in keeping the exchange rate stable.
Equity market
The inflow in the equity market has also set a new record after 10 years as net inflows climbed to $140m during FY24. The last time the equity market got such windfall was in 2014, Mr Abbas recalled.
The booming stock market is setting a new record almost every day and the 100-index has crossed the 80000-mark.
Experts see more inflows for the equity market if Pakistan clinches another deal with the IMF.
SBP reserves rise
The foreign exchange reserves of the State Bank shot up by half a billion dollars during the week that ended on June 28.
According to the central bank, the reserves rose by $494m to $ 9.389 billion due to receipts from multilateral agencies.
The country’s total reserves increased to $14.573bn, including $5.183bn held by commercial banks.
Published in Dawn, July 5th, 2024