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www.bloomberg.com Egypt Is Closer to Ending Devaluation of Year’s Wildest Currency
ByNetty Idayu Ismail and Mirette Magdy+Follow
4-4 minutes
The Egyptian pound is the world’s worst performer this year.
Photographer: Islam Safwat/Bloomberg
January 12, 2023, 1:58 PM UTCUpdated onJanuary 12, 2023, 5:57 PM UTC
Egypt’s third major currency devaluation in less than a year appeared closer to achieving its aim, with signs that the foreign-exchange market may be stabilizing despite a whipsawing pound.
The North African nation has allowed its currency to weaken in phases and the latest devaluation, which started last week, is finally helping to narrow the gap with prices quoted in the black market.
Read more: Dollar Black Market Seizes Up in Egypt as Devaluation Hits Trade
After suffering the biggest one-day drop since late October on Wednesday, the pound swung between gains of over 1% and a loss of 3%. Many traders in the black market paused operations after the plunge this week.
The pound is still the world’s worst performer this year, and measures of short-term historical volatility show the swings are the most extreme globally. On Wednesday, it pared losses from a record after state banks sold dollars, according to Citigroup Inc.
Foreign exchange was scarce for months in Egypt as the economy of the Middle East’s most populous country contended with the rising cost of commodities from food to fuel, triggered by Russia’s invasion of Ukraine. The pound has lost about 33% of its value since late October, when Egypt said it would embrace a flexible exchange rate, a move that helped it clinch a $3 billion loan from the International Monetary Fund.
Read more: IMF Says Egypt on Path for Flexible Currency But Challenges Loom
“The end of the devaluation process is close,” Citigroup strategists including Luis Costa and Lydia Rangapanaiken said in a report. “Although we do not expect the authorities to shift to a free-floating regime, further flexibility is expected, in line with the fund’s requirements.”
Trading volumes on Wednesday surged to about $831 million, according to Citigroup, an indication that the clearing of a backlog of pent-up demand for dollars is underway.
In a sign that foreign capital is trickling back into the country, investors from other Arab countries made net purchases of around 7 billion pounds ($236 million) in Egyptian Treasury bonds in the secondary market on Wednesday, according to the local stock exchange’s website.
In an auction of six-month Treasury bills held Thursday, the country sold 51.9 billion pounds of the securities at a yield of 21%, with investors offering to buy more than three times that amount.
Last year, the reluctance to allow for a steeper currency adjustment was a turnoff for international buyers, whose retreat from the local debt market helped push up the yields on Egypt’s Treasury bills by the most since 2016.
Dollar inflows into the interbank market reached as much as $750 million on Wednesday from an average of $150 million previously, state MENA news agency cited a banker as saying.
The pound was 0.6% stronger against the dollar on Thursday, trading around 29.61 at the close in Cairo. It slumped as much as 14% to a record low of 32.1 on Wednesday.
The parallel rate declined to 29-30 on Wednesday from 31-33, according to Citigroup’s strategists. Wednesday’s moves “reflect steps in the right direction,” they said.
— With assistance by Abdel Latif Wahba
(Update with result of Treasury bills auction in ninth paragraph.)
ByNetty Idayu Ismail and Mirette Magdy+Follow
4-4 minutes
The Egyptian pound is the world’s worst performer this year.
Photographer: Islam Safwat/Bloomberg
January 12, 2023, 1:58 PM UTCUpdated onJanuary 12, 2023, 5:57 PM UTC
Egypt’s third major currency devaluation in less than a year appeared closer to achieving its aim, with signs that the foreign-exchange market may be stabilizing despite a whipsawing pound.
The North African nation has allowed its currency to weaken in phases and the latest devaluation, which started last week, is finally helping to narrow the gap with prices quoted in the black market.
Read more: Dollar Black Market Seizes Up in Egypt as Devaluation Hits Trade
After suffering the biggest one-day drop since late October on Wednesday, the pound swung between gains of over 1% and a loss of 3%. Many traders in the black market paused operations after the plunge this week.
The pound is still the world’s worst performer this year, and measures of short-term historical volatility show the swings are the most extreme globally. On Wednesday, it pared losses from a record after state banks sold dollars, according to Citigroup Inc.
Foreign exchange was scarce for months in Egypt as the economy of the Middle East’s most populous country contended with the rising cost of commodities from food to fuel, triggered by Russia’s invasion of Ukraine. The pound has lost about 33% of its value since late October, when Egypt said it would embrace a flexible exchange rate, a move that helped it clinch a $3 billion loan from the International Monetary Fund.
Read more: IMF Says Egypt on Path for Flexible Currency But Challenges Loom
“The end of the devaluation process is close,” Citigroup strategists including Luis Costa and Lydia Rangapanaiken said in a report. “Although we do not expect the authorities to shift to a free-floating regime, further flexibility is expected, in line with the fund’s requirements.”
Trading volumes on Wednesday surged to about $831 million, according to Citigroup, an indication that the clearing of a backlog of pent-up demand for dollars is underway.
In a sign that foreign capital is trickling back into the country, investors from other Arab countries made net purchases of around 7 billion pounds ($236 million) in Egyptian Treasury bonds in the secondary market on Wednesday, according to the local stock exchange’s website.
In an auction of six-month Treasury bills held Thursday, the country sold 51.9 billion pounds of the securities at a yield of 21%, with investors offering to buy more than three times that amount.
Last year, the reluctance to allow for a steeper currency adjustment was a turnoff for international buyers, whose retreat from the local debt market helped push up the yields on Egypt’s Treasury bills by the most since 2016.
Dollar inflows into the interbank market reached as much as $750 million on Wednesday from an average of $150 million previously, state MENA news agency cited a banker as saying.
The pound was 0.6% stronger against the dollar on Thursday, trading around 29.61 at the close in Cairo. It slumped as much as 14% to a record low of 32.1 on Wednesday.
The parallel rate declined to 29-30 on Wednesday from 31-33, according to Citigroup’s strategists. Wednesday’s moves “reflect steps in the right direction,” they said.
— With assistance by Abdel Latif Wahba
(Update with result of Treasury bills auction in ninth paragraph.)
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Business news: Egitto, statunitense Apex acquisisce partecipazioni nel Deserto occidentale
La compagnia petrolifera statunitense Apex International Energy ha annunciato oggi l'acquisizione di partecipazioni in quattro blocchi nella...
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Egyptian T-bill sales surge in wake of currency depreciation
15/01/2023 16:17 - RSF
CAIRO, Jan 15 (Reuters) - Sales of Egyptian 91-day treasury bills leapt to 87.07 billion Egyptian pounds ($2.94 billion) at an auction on Sunday from 14.67 billion pounds last week, as investors continued to flood back after a sharp fall in the pound against the dollar.
Sales of 273-day bills, which were also auctioned on Sunday, shot up to 10.72 billion pounds from 135.6 million pounds last week, according to central bank data.
The average yield on the 91-day bills edged up to 20.52% from 20.281%, while that on the 273-day bills rose to 21.484% from 20.949%, the central bank said.
The Egyptian pound
weakened as low as 32.20 to the dollar on Wednesday from 27.60 at the open, but has since rebounded to 29.65.
At the start of the year, a dollar fetched less than 25 pounds. Until March last year the pound had been held steady at less than 16 to the dollar, nearly 50% stronger than its current value.
Egypt has been loosening its dollar peg in jumps, with a view to letting the currency float freely, as it promised the International Monetary Fund under a $3 billion financing deal announced in October.
Egypt has been suffering a shortage of foreign currency since the war in Ukraine hit tourism revenue, raised commodity import bills and led foreign investors to pull more than $20 billion out of the economy.
Sales of 182-day and 364-day treasury bills also surged at an auction on Thursday. (news)
($1 = 29.6475 Egyptian pounds)
(Reporting by Patrick Werr; Editing by Christina Fincher)
(([email protected]
)
15/01/2023 16:17 - RSF
CAIRO, Jan 15 (Reuters) - Sales of Egyptian 91-day treasury bills leapt to 87.07 billion Egyptian pounds ($2.94 billion) at an auction on Sunday from 14.67 billion pounds last week, as investors continued to flood back after a sharp fall in the pound against the dollar.
Sales of 273-day bills, which were also auctioned on Sunday, shot up to 10.72 billion pounds from 135.6 million pounds last week, according to central bank data.
The average yield on the 91-day bills edged up to 20.52% from 20.281%, while that on the 273-day bills rose to 21.484% from 20.949%, the central bank said.
The Egyptian pound
weakened as low as 32.20 to the dollar on Wednesday from 27.60 at the open, but has since rebounded to 29.65.
At the start of the year, a dollar fetched less than 25 pounds. Until March last year the pound had been held steady at less than 16 to the dollar, nearly 50% stronger than its current value.
Egypt has been loosening its dollar peg in jumps, with a view to letting the currency float freely, as it promised the International Monetary Fund under a $3 billion financing deal announced in October.
Egypt has been suffering a shortage of foreign currency since the war in Ukraine hit tourism revenue, raised commodity import bills and led foreign investors to pull more than $20 billion out of the economy.
Sales of 182-day and 364-day treasury bills also surged at an auction on Thursday. (news)
($1 = 29.6475 Egyptian pounds)
(Reporting by Patrick Werr; Editing by Christina Fincher)
(([email protected]
)
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Nonno pensionato
By Jorgelina do Rosario
LONDON, Jan 13 (Reuters) - Developing countries have sold a huge $39 billion of international bonds since the start of the year, with investors happy to pile into riskier debt as they bet global interest rates are nearing a peak.
The first half of January saw 11 countries launch more than 20 dollar- and euro-denominated bond issues. The scale of borrowing dwarfs the previous record of $26 billion raised in the same period in 2018, data from Morgan Stanley shows.
All the sales were at least three times oversubscribed, a sign that appetite for emerging market debt is back after a year in which many countries were effectively locked out from markets as global interest rates surged.
"More and more investors are willing to deploy cash and take some risks," Merveille Paja, EEMEA sovereign credit strategist for BofA said, adding that issuers such as Romania and Hungary had offered "extremely attractive premiums" on their recently issued dollar bonds.
Investment-grade-rated Saudi Arabia is the largest borrower so far, having sold $10 billion of five-, 10- and 30-year dollar bonds.
High-yield countries have also joined the issuance frenzy.
Turkey sold a $2.75 billion Eurobond at a 9.75% yield on Thursday while Mongolia is also set to tap markets.
"A coupon of about 10%-ish is quite high even by Turkey's standards," said Paul Greer, portfolio manager at Fidelity International, adding Turkey's fiscal problems, structural imbalances and impending noisy election meant he would not invest in the country despite the high coupon.
"Turkey is cheap, but it's cheap for a reason."
Morgan Stanley strategist Simon Waever said yields are high in historic terms, but that "most countries have no choice but to issue and absorb the higher cost".
Issuance year-to-date was already equivalent to 40% of all 2022's emerging hard-currency bond issuance, said Waever.
ROARING START
While emerging bond markets are off to a roaring start, that might not translate into a bumper year overall.
Morgan Stanley predicts total 2023 sovereign debt gross sales to hit $143 billion, driven by sales from the Middle East and North Africa and investment-grade countries in Asia. That is well above last year's multi-year low of $95 billion, but well short of 2020's record $233 billion.
Madhur Agarwal, head of Debt Capital Markets Origination Asia ex. Japan at JPMorgan, said that while January is usually a good month for countries to issue, demand was high because "investors see we are nearing the cap on U.S. interest rate hikes and it should be more stable going forward".
Emerging economies were not alone in their push to raise cash, with U.S. corporate issuers, European governments and other parts of the fixed income universe also ramping up issuance at the start of the year, some raising funds to help offset the impact of the energy crisis.
Costa Rica and Dominican Republic are among countries that need to tap the market this year and are likely to move soon, said Carlos de Sousa, a portfolio manager at Vontobel.
"It doesn't mean this is a short window of opportunity. It may be a long one, but the countries just don't know and we don't know either," de Sousa added, stressing that only two months ago investors "were still very much on the defensive" and sitting on a pile of cash.
With almost no bonds maturing in 2023, most economies in Sub-Saharan Africa don't need to issue overseas debt, de Sousa said, while Ivory Coast and Senegal will only do so if the market continues to rally.
"The blessing for 2023 is that we haven't got a huge spike in Eurobonds maturities for the frontier," said Gregory Smith, emerging markets fund manager at M&G Investments, referring to what are perceived as the riskiest of emerging markets.
He said Egypt would need to issue debt in the medium term but might wait for better market conditions, with indicated yields dropping to the 8-9% range from double-digits now.
"The country needs to deliver on the reforms it promised to the IMF," Smith said.
Nigeria could muddle through this year's presidential election without borrowing if it maintains a good buffer of FX reserves, according to Paja from BofA.
"Kenya and Angola will need to tap the market, while South Africa is staying away completely this year," she said.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jorgelina do Rosario and Scott Murdoch, Additional reporting by Mike Dolan, Editing by Karin Strohecker and Catherine Evans)
(([email protected])
LONDON, Jan 13 (Reuters) - Developing countries have sold a huge $39 billion of international bonds since the start of the year, with investors happy to pile into riskier debt as they bet global interest rates are nearing a peak.
The first half of January saw 11 countries launch more than 20 dollar- and euro-denominated bond issues. The scale of borrowing dwarfs the previous record of $26 billion raised in the same period in 2018, data from Morgan Stanley shows.
All the sales were at least three times oversubscribed, a sign that appetite for emerging market debt is back after a year in which many countries were effectively locked out from markets as global interest rates surged.
"More and more investors are willing to deploy cash and take some risks," Merveille Paja, EEMEA sovereign credit strategist for BofA said, adding that issuers such as Romania and Hungary had offered "extremely attractive premiums" on their recently issued dollar bonds.
Investment-grade-rated Saudi Arabia is the largest borrower so far, having sold $10 billion of five-, 10- and 30-year dollar bonds.
High-yield countries have also joined the issuance frenzy.
Turkey sold a $2.75 billion Eurobond at a 9.75% yield on Thursday while Mongolia is also set to tap markets.
"A coupon of about 10%-ish is quite high even by Turkey's standards," said Paul Greer, portfolio manager at Fidelity International, adding Turkey's fiscal problems, structural imbalances and impending noisy election meant he would not invest in the country despite the high coupon.
"Turkey is cheap, but it's cheap for a reason."
Morgan Stanley strategist Simon Waever said yields are high in historic terms, but that "most countries have no choice but to issue and absorb the higher cost".
Issuance year-to-date was already equivalent to 40% of all 2022's emerging hard-currency bond issuance, said Waever.
ROARING START
While emerging bond markets are off to a roaring start, that might not translate into a bumper year overall.
Morgan Stanley predicts total 2023 sovereign debt gross sales to hit $143 billion, driven by sales from the Middle East and North Africa and investment-grade countries in Asia. That is well above last year's multi-year low of $95 billion, but well short of 2020's record $233 billion.
Madhur Agarwal, head of Debt Capital Markets Origination Asia ex. Japan at JPMorgan, said that while January is usually a good month for countries to issue, demand was high because "investors see we are nearing the cap on U.S. interest rate hikes and it should be more stable going forward".
Emerging economies were not alone in their push to raise cash, with U.S. corporate issuers, European governments and other parts of the fixed income universe also ramping up issuance at the start of the year, some raising funds to help offset the impact of the energy crisis.
Costa Rica and Dominican Republic are among countries that need to tap the market this year and are likely to move soon, said Carlos de Sousa, a portfolio manager at Vontobel.
"It doesn't mean this is a short window of opportunity. It may be a long one, but the countries just don't know and we don't know either," de Sousa added, stressing that only two months ago investors "were still very much on the defensive" and sitting on a pile of cash.
With almost no bonds maturing in 2023, most economies in Sub-Saharan Africa don't need to issue overseas debt, de Sousa said, while Ivory Coast and Senegal will only do so if the market continues to rally.
"The blessing for 2023 is that we haven't got a huge spike in Eurobonds maturities for the frontier," said Gregory Smith, emerging markets fund manager at M&G Investments, referring to what are perceived as the riskiest of emerging markets.
He said Egypt would need to issue debt in the medium term but might wait for better market conditions, with indicated yields dropping to the 8-9% range from double-digits now.
"The country needs to deliver on the reforms it promised to the IMF," Smith said.
Nigeria could muddle through this year's presidential election without borrowing if it maintains a good buffer of FX reserves, according to Paja from BofA.
"Kenya and Angola will need to tap the market, while South Africa is staying away completely this year," she said.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jorgelina do Rosario and Scott Murdoch, Additional reporting by Mike Dolan, Editing by Karin Strohecker and Catherine Evans)
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Business news: Egitto, per Fmi incertezza globale proietta ombre sulla ripresa economica
Il Cairo, 15 gen 05:00 - (Agenzia Nova) - Nonostante il “coraggioso” passaggio a un tasso di cambio flessibile, l'incertezza globale proietta “una lunga ombra sulla ripresa economica dell'Egitto”, che deve necessitamene “portare avanti profonde riforme strutturali per stimolare una crescita sostenibile, inclusiva e creatrice di posti di lavoro”. Lo riferisce un rapporto pubblicato dal Fondo monetario internazionale (Fmi). La recente approvazione di un prestito di 46 mesi di 3 miliardi di dollari Usa concesso dal Fondo all’Egitto nell’ambito del Dispositivo finanziario esteso (Eff) “mira a raggiungere la stabilizzazione macroeconomica a breve termine, a rafforzare la resilienza e aumentare il potenziale di crescita a medio termine” del Paese arabo. Secondo gli esperti dell’istituzione finanziaria internazionale, il fabbisogno di finanziamento lordo del Paese ammonterà a circa il 35 per cento del Pil nell'anno fiscale 2026/27. “La capacità dell'Egitto di rimborsare il Fondo è adeguata, sebbene vi siano alcuni rischi”, avverte il fondo. “L'insufficiente flessibilità del tasso di cambio a seguito di potenziali shock rimane un importante rischio di attuazione delle politiche, soprattutto se comporta perdite di riserve di valuta estera”, aggiunge l’Fmi. “La materializzazione dei finanziamenti previsti da altre istituzioni finanziarie internazionali e partner bilaterali, compresi gli acquisti di attività del settore pubblico da parte dei Paesi del Consiglio di cooperazione del Golfo, e gli afflussi di portafoglio previsti sono fondamentali per la capacità di rimborso dell'Egitto”, precisa il rapporto. L'attuazione del programma Eff è considerata “fondamentale” per attenuare i rischi finanziari dell’Egitto. “L’adeguata capacità di rimborso dipende dall'attuazione completa e sostenuta del programma per creare fiducia e sbloccare i finanziamenti previsti. Anche con la piena attuazione del programma permangono rischi, ad esempio se gli shock esterni determinano un ulteriore inasprimento delle condizioni di finanziamento e un ampliamento del disavanzo delle partite correnti. In uno scenario del genere, sarebbero essenziali rapidi aggiustamenti politici”, spiega il rapporto. (Cae) © Agenzia Nova - Riproduzione riservata
Il Cairo, 15 gen 05:00 - (Agenzia Nova) - Nonostante il “coraggioso” passaggio a un tasso di cambio flessibile, l'incertezza globale proietta “una lunga ombra sulla ripresa economica dell'Egitto”, che deve necessitamene “portare avanti profonde riforme strutturali per stimolare una crescita sostenibile, inclusiva e creatrice di posti di lavoro”. Lo riferisce un rapporto pubblicato dal Fondo monetario internazionale (Fmi). La recente approvazione di un prestito di 46 mesi di 3 miliardi di dollari Usa concesso dal Fondo all’Egitto nell’ambito del Dispositivo finanziario esteso (Eff) “mira a raggiungere la stabilizzazione macroeconomica a breve termine, a rafforzare la resilienza e aumentare il potenziale di crescita a medio termine” del Paese arabo. Secondo gli esperti dell’istituzione finanziaria internazionale, il fabbisogno di finanziamento lordo del Paese ammonterà a circa il 35 per cento del Pil nell'anno fiscale 2026/27. “La capacità dell'Egitto di rimborsare il Fondo è adeguata, sebbene vi siano alcuni rischi”, avverte il fondo. “L'insufficiente flessibilità del tasso di cambio a seguito di potenziali shock rimane un importante rischio di attuazione delle politiche, soprattutto se comporta perdite di riserve di valuta estera”, aggiunge l’Fmi. “La materializzazione dei finanziamenti previsti da altre istituzioni finanziarie internazionali e partner bilaterali, compresi gli acquisti di attività del settore pubblico da parte dei Paesi del Consiglio di cooperazione del Golfo, e gli afflussi di portafoglio previsti sono fondamentali per la capacità di rimborso dell'Egitto”, precisa il rapporto. L'attuazione del programma Eff è considerata “fondamentale” per attenuare i rischi finanziari dell’Egitto. “L’adeguata capacità di rimborso dipende dall'attuazione completa e sostenuta del programma per creare fiducia e sbloccare i finanziamenti previsti. Anche con la piena attuazione del programma permangono rischi, ad esempio se gli shock esterni determinano un ulteriore inasprimento delle condizioni di finanziamento e un ampliamento del disavanzo delle partite correnti. In uno scenario del genere, sarebbero essenziali rapidi aggiustamenti politici”, spiega il rapporto. (Cae) © Agenzia Nova - Riproduzione riservata
