Egyptian government bond prices pick up again after currency devaluation

LONDON, March 21 (Reuters) – Egyptian government bonds denominated in dollars rose mostly on Monday after the country devalued its currency by nearly 14% and announced a surprise rate hike.

Dollar bonds continued to rebound from a selloff after Russia’s Feb. 24 invasion of Ukraine prompted foreign investors to withdraw billions of dollars from Egyptian Treasury markets earlier this month.

Tradeweb data showed one of the government bonds due to be repaid in 2040 up 1.3 cents at 77.7. The bond fell below 64 cents on the dollar on March 7 and traded on Monday at its highest level since March 1. It had closed last year at 84.25 cents.

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Analysts had seen a currency adjustment as a key stepping stone for Cairo to secure a new support package from the International Monetary Fund.

Egyptian central bank governor Tarek Amer told a news conference that the pound had undergone a “correction” that reflected global and local developments. The correction would make exports competitive and help preserve currency liquidity.

The decision to devalue was accompanied by a 100 basis point increase in the central bank’s benchmark interest rates, which raised the overnight lending rate to 10.25% and its deposit rate overnight at 9.25%. Read more

Analysts have warned that a combination of much higher energy and food prices, and the prospect of a sharp drop in the number of Russian and Ukrainian holidaymakers this year, will increase pressure on Egypt’s finances. .

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Reporting by Marc Jones, additional reporting by Rodrigo Campos; edited by Karin Strohecker and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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