Egyptian Pound, Bonds Drop for Third Month as Unrest Hinders IMF
The Egyptian pound and the benchmark dollar bonds headed for their third monthly declines as increased political instability hindered the country’s attempt to secure a $4.8 billion International Monetary Fund loan.
The pound depreciated less than 0.1 percent to 6.7403 a dollar as of 1:46 p.m. in Cairo after the central bank’s third foreign-exchange auction this week, taking the monthly drop to 0.4 percent. The currency has weakened 9.3 percent in the past three months, the worst performer among emerging-market currencies tracked by Bloomberg. The 5.75 percent dollar- denominated notes yielded 7.18 percent today, up 75 basis points, or 0.75 percentage point, in February.
Egypt’s political stalemate deepened this week when the National Salvation Front, an umbrella of opposition groups, said it was boycotting parliamentary elections that start in April. Securing the IMF loan is vital to improving the balance of payments and preventing an uncontrolled currency depreciation, Fitch Ratings Ltd. said yesterday.
Banks received less than a quarter of the currency they sought at today’s auction of $38.3 million of the U.S. currency, which was sold at a cut-off price of 6.7304, according to the regulator’s announcement on Bloomberg. A shortage of dollars has led to the emergence of a black market for the currency, with illegal traders charging 7.4 a dollar, according to data published by state-run news website Ahram Gate yesterday.
The Arab country also sold 2.5 billion pounds ($371 million) of six-month treasury bills and 4 billion pounds of 12- month securities today, according to central bank data on Bloomberg. The yield on one-year T-bills gained to 13.97 percent from 13.96 percent at last week’s auction, the data show. The six-month yield was little changed at 13.34 percent.
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