An official source at the Central Bank of Egypt (CBE) has stated that foreign investors have returned strongly to the Egyptian market since the start of January 2022, adding that $970m have been injected into Egypt as of 16 January.
The source said, according to the Middle East News Agency, that the investments include long-term bonds and treasury bills.
They added that the Egyptian economy is managing the repercussions of the international monetary policy, and this is a new significant boost.
They pointed out that “the balance of investments in long-term bonds exceeds the balance of short-term treasury bills.”
The Financial Stability Report recently issued by the CBE revealed that the banking sector has contributed to containing the sudden exit of portfolio investments from the local treasury bills market thanks to the high rates of liquidity in the local currency.
This is happening in light of the presence of a large base of local investors in addition to a surplus in net foreign assets created during the economic reform programme.
They explained that net inflows amounted to $7.3bn during the first half of 2020, while the second half of the year witnessed a return of foreign investors, which continued during the first half of 2021, raising their share of the total balances of treasury bills in local currency to 22.6% in June 2021 compared to June 2020’s 7.8%.
According to the report, net foreign assets recorded net inflows of $2.4bn during the first half of 2021. As a result, the liquidity ratio in foreign currency increased in June 2021 to 73.2% compared to 70.3% in June 2020; and the ratio of family sector deposits in foreign currency to the total non-governmental deposits in foreign currency stabilised at the level of 69% in June 2021, as well as the ratio of loans to deposits in foreign currency at 8.68% in the same month.
The CBE indicated that this supported the Egyptian government’s ability to access global financial markets, as it issued international bonds amounting to $3.8bn in February 2021 in three tranches, in which the subscription exceeded four times the offering, and the high global demand for Egyptian bonds helped reduce the yield by 37.5 points per tranche, in addition to a $5bn issuance in May 2020 right after the outbreak of the pandemic.
