On Monday, the Central Bank of Egypt announced the sale of one-year euro-denominated treasury bills worth 626.9 million euros, explaining that the average interest on the invoices recorded 1.697 per cent, with 32 requests from investors worth 786.9 million euros. Last June, the bank sold one-year dollar-denominated treasury bills worth 540 million dollars. In April, it sold about 1.017 billion dollars in accounts. it also sold Samurai bonds worth 493.26 million dollars in March.
Bloomberg has issued a report saying that there is a consensus among economists at Deutsche Bank and Goldman Sachs that the current value of the Egyptian pound is overvalued by about 10%. In comparison, Citigroup has an underestimated estimate of 5%. According to Bloomberg, the pound needs to be devalued by about 23% as the only viable solution to help the economy adjust and reduce the financing gap in Egypt. According to the report, the International Monetary Fund will ask Egypt for more flexibility in the exchange rate as part of its conditions to hand the country a new loan that could amount to more than $20 billion. Even after the pound recorded 11 weeks of losses in the offshore market, experts expected more declines, the worst consecutive streak of pound losses in nearly ten years.
Bloomberg added that policymakers might be concerned about the side effects of currency devaluation, such as rising inflation and social unrest. The report also indicated that the central bank’s net foreign reserves declined to $33.14 billion in July, the lowest level since June 2017. The government said in May that foreign investors had withdrawn about $20 billion from the domestic debt market since the beginning of the year.