Egyptian banks sold the Suez Canal investment vehicles for the second day on Friday after sale proceeds on the first day of release amounted to EGP 6m, according to statements released by Central Bank of Egypt (CBE) Governor Hisham Ramez on Thursday. Ramez said that banking liquidity is safe and has not been affected by the certificates' financing. Ismail Hassan, head of Misr Iran Development Bank, expected the demand to be high on the second day of release, pointing out that the first day of issuance saw a noticeable appetite for investment tools worth EGP 1,000. "Such certificates can be handed over after a year and their interest rates are paid every three months," he added. On Thursday, the government started to sell the five-year Suez Canal investment certificates at an interest rate of 12%. The certificates would be used to finance the digging of the new Suez Canal, which will increase the canal's revenues to $13bn, according to officials. "I forecast the sale proceeds of the certificates to be unprecedented in the Egyptian market, especially after the first day saw a significant demand on the tools," Hassan said. In Thursday's statements, Ramez described the sale proceeds of the first day as a "record" despite a major power cut that paralysed many businesses. "These record figures were made until 6pm despite power cuts," he added. The CBE has so far issued 7m investment certificates out of the planned 60m, said Ramez, adding that the bank is still discussing the date of issuing dollar-dominated certificates. Some economists have concerns about banking liquidity after the issuance of the investment certificates. Omar el-Sheneity, manager of Multiples, a financial consultancy company, said that the banking sector has a liquidity crisis and the country may resort to printing banknotes after individuals bought high-interest-rate certificates. "The fuel price hike and the depreciating value of the pound will lead to an increase in inflation rates which will accordingly cast a shadow over interest rates of the investment certificates," El-Sheneity added. El-Sheneity doubted that the Suez Canal Development Project will increase the canal's revenues as global trade is expected to face recession in the coming period due to political turmoil in the Middle East. The Egyptian government links the growth of the global trade with the increase of the Suez Canal revenues after expanding the canal. According to El- Sheneity, that would be difficult due to dwindling global economic growth. Last week, the Egyptian pound gained ground against the US dollar by 7 piastres. The CBE offered to buy dollars for EGP 7.13 and sell them for EGP 7.17. On Thursday, there was a demand for transferring US dollars to Egyptian pounds, leading to a decline in the value of the dollar by 3 piastres to stand at EGP 7.35. "There is almost no demand on the US dollar with increasing demand on buying the Suez Canal certificates," a trader said.
