diff --git a/docs/inventory-virtual-balance-model.md b/docs/inventory-virtual-balance-model.md
index 21a8e1b735..8fe9b72a92 100644
--- a/docs/inventory-virtual-balance-model.md
+++ b/docs/inventory-virtual-balance-model.md
@@ -34,7 +34,7 @@ This gives a "virtual" balance intended to better reflect near-future executable
 
 ## Core primitives
 
-### `getBalanceOnChain(chainId, l1Token, l2Token?, ignorePending?)`
+### `getBalanceOnChain(chainId, l1Token, l2Token?, ignoreL1ToL2PendingAmount?)`
 
 This is the base virtual-balance primitive. It:
 
@@ -44,6 +44,8 @@ This is the base virtual-balance primitive. It:
 - includes outstanding L1->L2 transfer amounts via CrossChainTransferClient
 - returns either per-token (`l2Token`) or aggregate-per-chain balance
 
+When `ignoreL1ToL2PendingAmount=true`, both positive virtual-inbound sources are suppressed: outstanding `CrossChainTransferClient` L1->L2 transfers and positive `pendingRebalances` entries. Callers like `withdrawExcessBalances` use this to avoid sizing a withdraw off inbound that hasn't physically landed. Negative `pendingRebalances` entries are preserved because adapters use them to reserve already-arrived intermediate funds for an onward bridge step (e.g. `HyperliquidStablecoinSwapAdapter` subtracts finalized Hypercore withdrawals from HyperEVM); dropping those would let a withdraw race the in-flight rebalance.
+
 ### `getCumulativeBalance(l1Token)`
 
 Sums virtual balances over all enabled chains. Used as denominator for allocation percentages.
diff --git a/src/clients/InventoryClient.ts b/src/clients/InventoryClient.ts
index 570219edbb..cf4483be64 100644
--- a/src/clients/InventoryClient.ts
+++ b/src/clients/InventoryClient.ts
@@ -276,6 +276,15 @@ export class InventoryClient {
    * @param chainId Chain to query token balance on.
    * @param l1Token L1 token to query on chainId (after mapping).
    * @param l2Token Optional l2 token address to narrow the balance reporting.
+   * @param ignoreL1ToL2PendingAmount If true, exclude virtual inbound balance that hasn't physically landed
+   *   on the target chain yet. Currently two sources contribute virtual inbound: canonical L1→L2 transfers
+   *   from `crossChainTransferClient`, and rebalancer-service pending rebalances from `pendingRebalances`.
+   *   Both inbound sources are excluded together so callers that want a liquidity-faithful view see the
+   *   same picture regardless of which subsystem initiated the in-flight inbound. Negative
+   *   `pendingRebalances` entries are preserved: adapters such as the Hyperliquid stablecoin swap subtract
+   *   already-finalized intermediate withdrawals from the destination chain to reserve liquid funds for the
+   *   onward bridge step, and treating those reservations as excess would let `withdrawExcessBalances` pull
+   *   them away from the pending rebalance.
    * @returns Balance of l1Token on chainId.
    */
   protected getBalanceOnChain(
@@ -302,7 +311,14 @@ export class InventoryClient {
     }
 
     // Add in any pending swap rebalances. Pending Rebalances are currently only supported for the canonical L2 tokens
-    // mapped to each L1 token (i.e. the L2 token for an L1 token returned by getRemoteTokenForL1Token())
+    // mapped to each L1 token (i.e. the L2 token for an L1 token returned by getRemoteTokenForL1Token()).
+    // When `ignoreL1ToL2PendingAmount` is set, drop positive entries for the same reason we skip
+    // `crossChainTransferClient` pending transfers below: they inflate the chain's perceived balance with
+    // in-flight inbound that hasn't physically arrived, which can cause `withdrawExcessBalances` to size a
+    // withdraw that the on-chain ERC20 balance cannot cover. Negative entries are preserved because adapters
+    // use them to reserve already-arrived intermediate funds for a still-pending onward bridge step (e.g.
+    // `HyperliquidStablecoinSwapAdapter` subtracts finalized Hypercore withdrawals from HyperEVM); ignoring
+    // those would let `withdrawExcessBalances` count the reserved balance as excess.
     const pendingRebalancesForChain = this.pendingRebalances[chainId];
     const canonicalL2Token = getRemoteTokenForL1Token(l1Token, chainId, this.hubPoolClient.chainId);
     if (
@@ -313,7 +329,9 @@ export class InventoryClient {
       const { decimals: l2TokenDecimals } = this.getTokenInfo(canonicalL2Token, chainId);
       const pendingRebalancesForToken = pendingRebalancesForChain[l1TokenSymbol];
       if (isDefined(pendingRebalancesForToken)) {
-        balance = balance.add(sdkUtils.ConvertDecimals(l2TokenDecimals, l1TokenDecimals)(pendingRebalancesForToken));
+        const includedAmount =
+          ignoreL1ToL2PendingAmount && pendingRebalancesForToken.gt(bnZero) ? bnZero : pendingRebalancesForToken;
+        balance = balance.add(sdkUtils.ConvertDecimals(l2TokenDecimals, l1TokenDecimals)(includedAmount));
       }
     }
 
diff --git a/src/clients/README.md b/src/clients/README.md
index d2be5c016d..8af894a400 100644
--- a/src/clients/README.md
+++ b/src/clients/README.md
@@ -27,6 +27,8 @@ The full inventory config is defined in /src/interfaces/ and its read from the u
 
 The InventoryClient is designed to track inventory across chains, which are actual on-chain token balances plus any virtual balance modifications stemming from incomplete transfers from the `CrossChainTransferClient` and incomplete rebalances from rebalancer clients. The InventoryClient can also add in virtual modifications for upcoming relayer refunds from the `BundleDataApproxClient`.
 
+`getBalanceOnChain` exposes an `ignoreL1ToL2PendingAmount` flag for callers that need a liquidity-faithful view (notably `withdrawExcessBalances` via `getCurrentAllocationPct`): when set, it suppresses both sources of positive virtual inbound — outstanding `CrossChainTransferClient` L1→L2 transfers and positive `pendingRebalances` entries — so the size of a withdraw isn't keyed off in-flight inbound that hasn't physically landed. Negative `pendingRebalances` entries are intentionally preserved: rebalancer adapters use them to reserve already-arrived intermediate balance for an onward bridge step (for example, `HyperliquidStablecoinSwapAdapter` subtracts finalized Hypercore withdrawals from HyperEVM), and counting those as excess would let a withdraw race the in-flight rebalance.
+
 The InventoryClient exposes functions that let other bots like the `Relayer` and rebalancer clients know its latest calculation of virtual chain balances for a particular token. For pending rebalance adjustments specifically, it depends on the read-only `ReadOnlyRebalancerClient` interface so it does not need to choose a rebalancing mode.
 
 In addition to chain-level virtual balances, InventoryClient exposes cumulative token-level balance context via `getCumulativeBalanceWithApproximateUpcomingRefunds()`. The Rebalancer uses this to evaluate cumulative deficits and excesses when running cumulative inventory rebalancing.
diff --git a/test/InventoryClient.InventoryRebalance.ts b/test/InventoryClient.InventoryRebalance.ts
index 06ad2f3e2b..7f371933d8 100644
--- a/test/InventoryClient.InventoryRebalance.ts
+++ b/test/InventoryClient.InventoryRebalance.ts
@@ -393,6 +393,37 @@ describe("InventoryClient: Rebalancing inventory", function () {
     );
     expect(arbitrumUsdcBalance.eq(tokenClient.getBalance(ARBITRUM, arbitrumUsdcL2Token).add(pendingUsdcSwapRebalance)))
       .to.be.true;
+
+    // Case 4: ignoreL1ToL2PendingAmount=true excludes positive pendingRebalances from the virtual balance,
+    // so callers requesting a liquidity-faithful view (e.g. `withdrawExcessBalances` via
+    // `getCurrentAllocationPct`) don't size against in-flight inbound that hasn't physically landed on the
+    // chain.
+    const arbitrumUsdcBalanceIgnoringPending = inventoryClient.getBalanceOnChain(
+      ARBITRUM,
+      EvmAddress.from(mainnetUsdc),
+      arbitrumUsdcL2Token,
+      true
+    );
+    expect(arbitrumUsdcBalanceIgnoringPending.eq(tokenClient.getBalance(ARBITRUM, arbitrumUsdcL2Token))).to.be.true;
+
+    // Case 5: ignoreL1ToL2PendingAmount=true still applies negative pendingRebalances entries. Adapters
+    // (e.g. `HyperliquidStablecoinSwapAdapter`) subtract already-arrived intermediate funds from the
+    // destination chain to reserve them for a still-pending onward bridge step; treating those reservations
+    // as excess would let `withdrawExcessBalances` pull liquid balance away from the pending rebalance.
+    const reservedUsdcOnArbitrum = toMegaWei(50).mul(-1);
+    mockRebalancerClient.setPendingRebalance(ARBITRUM, "USDC", reservedUsdcOnArbitrum);
+    await inventoryClient.update();
+    const arbitrumUsdcBalanceWithReservation = inventoryClient.getBalanceOnChain(
+      ARBITRUM,
+      EvmAddress.from(mainnetUsdc),
+      arbitrumUsdcL2Token,
+      true
+    );
+    expect(
+      arbitrumUsdcBalanceWithReservation.eq(
+        tokenClient.getBalance(ARBITRUM, arbitrumUsdcL2Token).add(reservedUsdcOnArbitrum)
+      )
+    ).to.be.true;
   });
 
   it("Refuses to send rebalance when ERC20 balance changes", async function () {
diff --git a/test/mocks/MockInventoryClient.ts b/test/mocks/MockInventoryClient.ts
index 9829e32390..d9909425d5 100644
--- a/test/mocks/MockInventoryClient.ts
+++ b/test/mocks/MockInventoryClient.ts
@@ -95,8 +95,13 @@ export class MockInventoryClient extends InventoryClient {
     this.balanceOnChain = newBalance;
   }
 
-  override getBalanceOnChain(chainId: number, l1Token: string, l2Token?: string): BigNumber {
-    return this.balanceOnChain ?? super.getBalanceOnChain(chainId, l1Token, l2Token);
+  override getBalanceOnChain(
+    chainId: number,
+    l1Token: string,
+    l2Token?: string,
+    ignoreL1ToL2PendingAmount = false
+  ): BigNumber {
+    return this.balanceOnChain ?? super.getBalanceOnChain(chainId, l1Token, l2Token, ignoreL1ToL2PendingAmount);
   }
 
   setTokenMapping(tokenMapping: TokenMapping): void {