Egypt Offers Banks $50 Million as Violence Weighs on Pound
Egypt’s central bank will offer $50 million at a currency auction today as the pound weakens amid an escalation of unrest since the second anniversary of the Jan. 25 uprising. The benchmark dollar bonds fell for a third day.
The regulator will auction $50 million to local lenders, which are able to bid for as much as $7 million each, according to its announcement on Bloomberg. The central bank sold $48.1 million of the U.S. currency at a Jan. 27 auction, the smallest amount since it started the sales on Dec. 30 in a bid to conserve foreign reserves. Banks received about 28 percent of what they sought that day.
The pound, which has weakened 7 percent in the past month, was unchanged at a record 6.6565 a dollar as of 10:30 a.m. in Cairo. The currency’s depreciation accelerated after the last auction as clashes in several Egyptian provinces killed more than 50 people, according to Health Ministry estimates.
The yield on the government’s 5.75 percent dollar- denominated 2020 bonds rose three basis points, or 0.03 of a percentage point, to 5.73 percent, taking its three-day advance to 17 basis points, according to prices compiled by Bloomberg. That’s the highest level on a closing basis in more than three weeks.
Thousands of people marched in Suez Canal cities last night in defiance of a curfew and state of emergency declared in their region by President Mohamed Mursi. The nation’s biggest opposition bloc rejected yesterday’s round of talks with the government.
The central bank will also offer 5 billion Egyptian pounds ($751 million) of seven-day repurchase agreements today. The contracts allow government-debt holders to sell securities back to the regulator for access to temporary funds at 9.75 percent.
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