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.