Foreigners' investments in Egyptian treasury bills increased to EGP 10.2bn following pound's flotation: Al-Nozihy

Banks acquired 76.4% of the total outstanding balances of bills by the end of November 2016

Foreigners' investments in treasury bills issued by the Egyptian government jumped to EGP 10.2bn at the end of December 2016, according to deputy governor of the Central Bank of Egypt (CBE) for economic research Naglaa Al-Nozihy.
Al-Nozihy told Daily News Egypt that the value of the foreigners' investments in bills are included in the monthly report of the CBE in Egyptian pounds, not in US dollars, as published incorrectly in the media on Wednesday.
The amount equals to $540m based on the average of the dollar exchange price of EGP 19. There is state of ambiguity about the destiny of the dollar proceeds, which are ceded by the foreign investors to be invested in bills in local currency, and whether they are included in the foreign exchange reserves or not.
Hot money is usually deposited in a provided account at the CBE, and are not included in assets of the reserve due to their special nature—as they can exit at any time.
Foreigners' investments in the Egyptian treasury bills registered roughly $ 11bn before 25 January 2011, but declined to less than $25m at the beginning of 2016.
According to the report of the CBE released on Wednesday, the total size of the outstanding balances of treasury bills by the end of November 2016 stood at EGP 703.2bn, as the share of the foreign investors were estimated at EGP 7.797bn.
Banks acquired 76.4% of the total of those balances, and their investments in treasury bills were worth EGP 537.5bn, of which EGP 274.8bn came from public banks, EGP 227.1bn from private banks, EGP 10.05bn from specialised banks, and EGP 25.4bn from the branches of foreign banks operating in the Egyptian market.
Al-Nozihy has stressed in her statements on Wednesday that the significant return of foreign investors transactions on treasury bills confirms the return of their confidence in the Egyptian economy and the economic reforms and decisions implemented by the Egyptian government and the CBE.
She noted that the CBE increased the key interest rates exceptionally at a rate of 300 basis points on the deposit and lending interests to 17.75% and 15.75% for one night, which enhanced the treasury bills attractiveness.
The CBE took into account that the international investor is expecting the Egyptian pound to recover its value against the dollar.
"This big jump in foreign investment in Egyptian government bills is a positive sign that we are on the right track regarding the application of the economic reform programme. There are other positive indicators on the improvement of tourism and exports, decline of imports, and the reduction of commercial deficit," according to Al-Nozihy.