Will global funds return to invest in the Egyptian pound?
Sources said that today, Wednesday, international funds (indirect foreign investment) transferred millions of dollars to banks to invest in the Egyptian pound.
The movement, according to sources, occurred at the auction of treasury bills scheduled for tomorrow, Thursday, which led to the movement of the dollar against the pound today up and then down.
The pound recorded a historic decline against the dollar in trading today, Wednesday, in banks, so that the price of the dollar jumped to a record level of 32 pounds for the first time before falling back. to less than 30 pounds at the end of the auction.
Sources told Masrawy that this is the first time that foreign investors have entered the Egyptian market, almost a year after they left due to the Russian-Ukrainian war.
Prime Minister Dr. Mostafa Madbouli said earlier that the Russo-Ukrainian war led to the withdrawal of $22 billion of indirect investment in treasury bills and bonds over the past year.
Sources indicated that the arrival of foreigners to buy the dollar required a reduction in the price of the pound to encourage them to invest in the Egyptian pound through debt instruments (treasury bills).
Any foreign investor in treasury bills entering any emerging market country, including Egypt, seeks to buy local currency at a low price against the dollar and earn a profitable return to achieve profits.
The investor also needs the price of the pound to rise against the dollar at the time of his exit after the expiration of the notes to a higher level than the price he entered, or at the same price, in order to profit from the two price differences.
The Treasury Department agreed to raise interest rates to 2% in T-bills trading last Thursday, so the yield jumped to 21.490% for the first time in about 5 and a half years, according to the data. published on the website of the Central Bank.
Treasury bills are one of the instruments of public debt, on which the Ministry of Finance borrows in Egyptian pounds to meet its needs to finance the general budget of the state, and in exchange for this money gives interest.
The entry of foreigners came today after the International Monetary Fund announced in a report released yesterday, Tuesday, the recently agreed program of cooperation with Egypt in the field of economic reforms, the commitment of the Egyptian authorities to a flexible exchange rate that adapts to the dynamics of the balance of payments, avoids repeated accumulation of imbalances and maintains competitiveness.