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Foreign investors return to Egyptian T-bill auction after devaluation, bankers say

FORIEGN investors have resumed purchases of Egyptian treasury bills after a long absence, three bankers said, as results posted by the central bank showed local currency one-year bills nearly three times oversubscribed at an auction on Thursday.

The central bank results showed one-year T-bills worth 87.8 billion Egyptian pounds ($1.78 bln) had been sold at an average yield of 32.303%, a day after the bank raised interest rates by 6% and let the pound depreciate sharply against the dollar.

Egypt received total bids worth 254.0 bln Egyptian pounds ($5.15 bln) for the one-year T-bill auction, the results showed.

In a sixth-month auction, the central bank said it had sold 14.2 billion Egyptian pounds ($287.9 million) worth of T-bills with an average yield of 31.837%.


The Egyptian pound value of one-year T-bills sold on Thursday was significantly higher than at weekly auctions since the start of the year, when the average yield had been between 26.607% and 29.913%.

The value of six-month bills was higher than all but one of the previous auctions this year, where an average yield of 26.001%-28.579% was offered.

Foreign investors submitted bids across the two auctions worth $2.26 billion, of which the central bank accepted $825.2 million, according to figures supplied by a banker.

The central bank data does not differentiate between foreign and local buyers.

Foreign investors convert dollars into Egyptian pounds to buy T-bills with tenors of three months to one year and take advantage of Egypt’s high interest rates, which they expect to then reconvert into foreign currency and repatriate.

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Egypt had said it intended to reduce dependency on carry trade foreign currency and vulnerability to external shocks.