Egyptian treasury bond sales plummet on currency concerns
Sales of three-year treasury bonds issued on Tuesday plummeted to 1.09 million Egyptian pounds ($35,332) after the government baulked at the high yields demanded by investors concerned the currency is likely to depreciate soon.
The central bank received 26 bids worth 5.77 billion pounds with a weighted average yield of 24.15 percent at an auction on Monday, but accepted only one of these bids at a yield of 21.7 percent.
The accepted yield was unchanged from a similar offering on March 21, when 5.06 billion pounds were sold, despite a 200 basis-point increase in the central bank's overnight deposit rate to 18.75 percent on Thursday.
Analysts say investors are also holding back bond purchases on the expectation treasury bond yields will soon begin rising to match the increase in overnight rates.
The central bank said it raised rates to help tame soaring inflation, which leapt to 31.9 percent in February.
Analysts say pressure has been building on Egypt to devalue its currency after it lost ground on the black market in recent weeks, even though its official price has fallen by half against the dollar over the last year.
The official price of the pound has changed little over the last four weeks at about 30.9 to the dollar, while on the black market it has been trading at between 36 and 37, bankers and dealers say.
The accepted yield was unchanged from a similar offering on March 21, when 5.06 billion pounds were sold, despite a 200 basis-point increase in the central bank's overnight deposit rate to 18.75 percent on Thursday.
Analysts say investors are also holding back bond purchases on the expectation treasury bond yields will soon begin rising to match the increase in overnight rates.
The central bank said it raised rates to help tame soaring inflation, which leapt to 31.9 percent in February.
Analysts say pressure has been building on Egypt to devalue its currency after it lost ground on the black market in recent weeks, even though its official price has fallen by half against the dollar over the last year.
The official price of the pound has changed little over the last four weeks at about 30.9 to the dollar, while on the black market it has been trading at between 36 and 37, bankers and dealers say.