At a Dollar auction held today, the depreciation of Egyptian Pound, the major currency of Egypt accelerated. This was mainly caused by the several uprisings throughout the country and its clashes with the military of Egypt. Incidentally, the country marks the 2nd anniversary of the previous uprising which resulted into ousted of Hosni Mubarak from the post of President.
The Central Bank of Egypt sold lenders $48.1 million at a cut off of 6.6235 per USD, as confirmed through the officials of the bank. This marks a retreat of 0.3% from the last sale held on 22nd January. In that auction, the currency experienced a drop of 0.2%. Incidentally, on today, Egyptian Pound has dropped against all of its major peers.
The Central Bank started this auction on 30th December and since then, today is the day when Dollars have been sold the least. According to the Central Bank, it is currently on its way to conserve the foreign currency reserves as it attempts to revive the minimum and critical levels of it. Since the start of the revolt, today, Egyptian Pound has experienced its largest fall, that of 7%. Total bonds purchased on today were of $938.4 million.
Amr Seif, who is the Chief Dealer at the Piraeus Bank Egypt, stated that political instability is a big factor for the country at the time being. Amr added that this unrest can cause further delay to the loan from the International Monetary Fund and hence, the Egyptian Pound is facing more pressure than ever. Amr commented further that until the instability gets over and the visibility of inflows of the foreign currency somehow starts to be lacking, Egyptian Pound will continue to drop further.
Incidentally, in last November, Egypt signed a preliminary agreement with IMF to obtain a loan worth $4.8 billion. However, the political unrests since that time have prohibited the lender’s board from giving the final approval. Incidentally, a team from IMF will return to Egypt within the next 2 weeks, as announced by Hisham Qandil, the Prime Minister of Egypt.
At a separate auction held today, around 4 billion Pounds of treasury bills were sold by Egypt. The 9-month yields have actually increased the most in last 3 weeks. The yield on the 3-month notes declined by 6 basis points and is at 12.83% currently.