Pakistan has seen unprecedented inflows of foreign money this year. Global investors bought 1-year bonds worth $642 million in November alone.

That is expected to reach a record $3 billion by the end of the fiscal year as investors are lured by high interest rates and promises of economic reform.

According to Abdul Hafeez Shaikh, financial adviser to Prime Minister Imran Khan, foreign direct investment surged 200 percent in the first half of 2019. Stocks have also risen, with the main Karachi stock index up by 13 percent over the past month, making it the best-performing stock exchange of the 94 tracked by Bloomberg.

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“A double-digit yield on a cheap currency is a good value trade in itself,” Charles Robertson from Renaissance Capital told Deutsche Welle. “I would recommend investors keep buying Pakistan while it offers double-digit interest rates,” he said.

Robertson added that even central bank rate cuts of a few percent would still make Pakistan interesting. “The current policy choices of Pakistan offer the country the best chance of getting onto a sustainable growth path. Borrowing costs are lower thanks to foreign investors buying government debt.”

Central bank data showed that of 1-year papers bought in November, 55 percent were from the UK and 44 percent from the US.

Habib Bank CEO Muhammad Aurangzeb said that Pakistan plans to issue $1 billion worth of ‘Panda bonds’ in the first quarter of 2020 in the Chinese market for the first time in yuan. A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in China.

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This week, Moody’s upgraded Pakistan’s credit outlook from negative to stable, saying the financial situation is on a path of improvement. It also expressed hope that the help from the International Monetary Fund (IMF) will mitigate the risks to its economy. Last month, Islamabad secured another tranche from the IMF as part of a $450-million loan package.

The experts at Moody’s said the country’s economic recovery reduces “external vulnerability risks,” but warned that “foreign exchange reserve buffers remain low and will take time to rebuild.”

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