CAIRO: Analysts see support for the Egyptian pound at its current level of 5.8 to the dollar as demand for riskier emerging market assets boosts foreign appetite for Egyptian stocks and treasuries.
"We have seen interest from foreign players in the market selling dollars and buying pounds, and we believe this can be equity or fixed-income related," said a currency analyst in Cairo.
The pound weakened to a five-year low of 5.813 against the US currency on Dec. 20 after a volatile fourth quarter that was marked by foreign selling of Egyptian treasuries, increased political uncertainty during parliamentary elections and the perception that Egypt’s central bank was not intervening to steady the currency.
Since a foreign sell-off of Egyptian treasury bills towards late October, the average yield on Egyptian 182-day treasuries has climbed to 10.33 percent from 9.49 percent. On Tuesday, the pound strengthened to 5.79.
"The strengthening … is more attributable to general risk appetite at the beginning of the year" than central bank intervention to support the pound, said a strategist at BNP Paribas in London.
