Central Bank of Egypt sells $1b treasury bills as yields hit record highs

RIYADH, Dec 09 (Arab News): The Central Bank of Egypt sold three-month treasury bills worth 52.75 billion Egyptian pounds ($1.03 billion) in its latest auction on Dec. 8.

According to data from the institution, this amount exceeded the targeted collection of 35 billion pounds by more than 50 per cent.

Investors submitted bids totaling 78.56 billion pounds, showcasing heightened interest despite the economic pressures posed by inflation and currency depreciation.

Egypt's inflation rate eased in October, rising 1.5 per cent compared to 2.3 per cent in September, driven by lower food prices. Annual inflation dropped to 26.3 per cent, down sharply from 38.5 per cent a year earlier.

The auction recorded a minimum yield of 30.10 per cent and a maximum yield of 34 per cent, with the weighted average yield rising to 31.42 per cent, up from 31.2 per cent in the previous auction.

In addition to the 91-day bills, the Central Bank also auctioned treasury bills with tenors of 182 days, 273 days, and 364 days. For the 182-day bills, a nominal amount of 7.19 billion pounds was accepted out of 86.35 billion pounds in bids, with a weighted average yield of 30.996 per cent.

The 273-day bills raised 4.41 billion pounds from 48.83 billion pounds in bids, recording an average yield of 28.76 per cent. Meanwhile, the 364-day bills secured 2.18 billion pounds from 42.3 billion pounds in submitted bids, with an average yield of 26.24 per cent.

The sharp rise in yields comes as the Egyptian pound continues to weaken, surpassing the 50-pound mark against the US dollar. This depreciation has fueled inflationary pressures, driving up borrowing costs for the government.