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Following devaluation, foreign investors return to Egyptian T-bill auction

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After a protracted break, foreign investors have started buying Egyptian Treasury bills again, according to three bankers. The central bank’s data revealed that local currency one-year bills were almost three times oversubscribed during an auction on Thursday.

A day after the central bank boosted interest rates by 6% and allowed the pound to weaken significantly versus the dollar, one-year T-bills worth 87.8 billion Egyptian pounds ($1.78 billion) were sold at an average yield of 32.303%, according to the bank’s figures.

According to the results, Egypt received bids totaling 254.0 billion Egyptian pounds ($5.15 billion) for the one-year T-bill auction.

The central bank announced that it has sold 14.2 billion Egyptian pounds ($287.9 million) worth of T-bills with an average yield of 31.837% during a sixth-month auction.

One-year T-bills that were sold on Thursday had an Egyptian pound value that was much greater than what it had been in weekly auctions since the beginning of the year, when the average yield ranged from 26.607% to 29.913%.

Six-month bills were valued at a greater percentage than in all but one of this year’s prior auctions, where an average yield of 26.001%–28.579% was available.

According to information provided by a banker, foreign investors placed bids totaling $2.26 billion over the course of the two auctions, of which the central bank accepted $825.2 million. There is no distinction between domestic and foreign buyers in the central bank data.

Before investors withdrew from the carry trade—also referred to as buying T-bills by foreigners—at the start of the conflict in Ukraine two years ago, Egypt relied heavily on this risky source of foreign exchange inflows.

Taking advantage of Egypt’s high interest rates, foreign investors change dollars into Egyptian pounds to purchase T-bills with maturities ranging from three months to one year. The investors plan to repatriate the proceeds after reconverting them into foreign currency.

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Food prices drive second straight monthly hike in Nigeria’s inflation

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According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

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MTN financial report reveals drop in group service revenue

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Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.

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