On Wednesday, Bloomberg reported that Egypt sold $35,275 worth of three-year securities, stating that this is the lowest amount it has ever raised from selling domestic bonds. According to the news website, this is because the government refrained from offering high returns in exchange for buying its debt in the local currency, which is demanded by investors who fear there will be a new depreciation of the Egyptian pound. This comes in light of expectations that Egypt may have to devalue its currency for the fourth time in a little over a year. The Egyptian government is also struggling to provide hard currency for imports and to increase foreign direct investment inflows. On Sunday, the Central Bank of Egypt announced that the interest rate on treasury bills had risen, reaching a new record high, exceeding 23%. However, the Egyptian government accepted only eight offers totalling about EGP 79 million. Banks offered to buy treasury bills worth 21.2 billion Egyptian pounds, while they asked for interest between 22.5% and 25.5%.

Banking expert Hani Aboul Fotouh considered that the interest rate hike reflected the Central Bank of Egypt’s Monetary Policy Committee’s decision last month to raise interest rates to rein in inflation, expecting a further rise in interest rates. “Raising interest rates is reflected in lending and borrowing, including government requests to borrow from banks to finance the deficit between its expenditures and revenues,” he added. A financial analyst, who declined to be named, said that the government is also using the bids to attract foreign investments in Egyptian debt instruments, allowing it to collect hard currency, even for a relatively limited time. “However, until now, foreigners’ appetite to invest in Egyptian debt instruments has not witnessed any improvement, given the rise in inflation locally to 32.9% last February, which means that the real interest rate is currently a negative value,” he said. “The problem is that the global interest rate is high, and Egypt has become a high-risk market.”