Foreign investments in T-bills hit LE210.2B by end of October

CAIRO – 28 November 2018: Foreign investments in treasury bills (T-bills) recorded LE 210.21 billion ($11.71 billion) by the end of October, compared to LE 234.52 billion ($13.06 billion) by the end of September, according to data from the Central Bank of Egypt (CBE).

CBE revealed that foreign investments in T-bills in local currency declined for the seventh month in a row, losing around $1.4 billion in October, to reach its lowest levels since June 2017.

Current balances of T-bills recorded LE 1.316 trillion by the end of October, compared to LE 1.305 trillion by the end of September.

The outflows of foreign investments in T-bills reached around $9.8 billion during the period of April to October 2018, as the investments hit LE 380.3 billion ($21.5 billion) in March.

This downtrend came on surface as a result of the crisis of emerging markets that started in April and caused a lack of trust between traders and the interest rates in these markets.

Emerging markets were affected by an exit wave of foreign investments in government debt instruments during the second quarter of 2018 as the US dollar rose, raising fears from the economies of these markets, especially after the crises of Turkey and Argentina.

In November meeting, the Monetary Policy Committee (MPC) of CBE kept interest rates unchanged for the fifth time this year, setting the overnight deposit rate and the overnight lending rate at 16.75 percent and 17.75 percent, respectively.

As per emerging markets, Argentina and Turkey are facing currency crises, which led Argentina’s central bank to set interest rates at 60 percent.

The Central Bank of Turkey also raised its benchmark interest rate by 625 base points to 24 percent on September 13, 2018.

With the downtrend of these countries' currencies, in addition to the hike of their interest rates, foreign investors would like to exit other markets and enter these countries' markets.

Banks'investments in T-bills

As per banks, they raised their investments in T-bills during October by LE 10.5 billion, recording LE 749.12 billion, compared to LE 738.64 billion by the end of September.

This increase was backed by the hike in public banks' investments which hit LE 386.33 billion by the end of October, compared to LE 380.33 billion in September. Foreign banks’ investments marked an increase to LE 46.3 billion compared to LE 35.44 billion in September.

Meanwhile, investments of specialized banks recorded LE 14.12 billion in October, up from LE 13.65 billion in September, and private sector banks reached investments of LE 302.42 billion, down from LE 309.16 billion in September.

During the first half of 2018, local banks lowered their investments in T-bills, recording about LE 665 billion, compared to LE 680.4 billion by the end of December, with a decrease of LE 15 billion.

In January, total investments of the banking sector in T-bills declined to LE 645 billion, reaching LE 619 billion in February, and rebounded to LE 650 billion in March.
Banks' investments fell again in April to LE 642 billion, and then hiked in May and June to LE 662 billion and LE 665 billion, respectively.