Pakistan has attracted $176 million in foreign inflows into its sovereign bonds in January 2026, marking the largest monthly investment in 19 months, according to Bloomberg. This surge highlights growing foreign confidence in Pakistan’s debt markets and comes amid the USD to PKR rally, with the rupee posting its eighth consecutive monthly gain against the US dollar.
Data from the State Bank of Pakistan (SBP) shows that about 85% of these inflows were directed toward short-term government bonds with maturities of one year or less. This represents a sharp reversal from January of last year, which saw net outflows of $50 million.
Analysts attribute the renewed foreign participation to currency stability, improving macroeconomic indicators, and policy continuity. BMI, a unit of Fitch Solutions, predicts that policymakers will maintain the rupee around 280 per USD throughout 2026, providing further confidence to investors.
The inflows coincide with the Pakistani rupee’s sustained recovery from its July 2025 low. Government officials highlight that strengthening external balances and consistent economic policies have played a key role in reviving investor interest in Pakistan’s debt markets.
A government official commented:
“Currency stability, improved external accounts, and consistent policy measures are driving renewed foreign investor confidence in Pakistan’s sovereign bonds.”
With foreign investment returning strongly to short-term bonds and the USD to PKR exchange rate stabilizing, Pakistan’s debt markets are experiencing renewed optimism, signaling a positive outlook for investors and the local currency.
