Central Bank of Egypt to issue $850m US dollar-denominated T-bills today

Central Bank of Egypt to issue $850m US dollar-denominated T-bills today

 

According to Daily News, The Central Bank of Egypt (CBE) will issue today US dollar-denominated treasury bills (T-bills), worth $850m for a year, due on 2 January 2024.

 

The CBE uses the proceeds of this T-bills bid to pay the value of a previous bid submitted by the bank on 4 January 2022 at a value of $852.9m.

 

The Central Bank of Egypt had received 22 offers at a value of $1.140bn to cover a similar bid it put out on 5 December, at a value of $990m.

 

According to data posted on the Central Bank’s website, the bank accepted 16 of those offers at the same offering value. The lowest interest rate was 4.59%, the highest rate was 4.6%, and the average rate was 4.598%. This follows recent increases in the dollar’s global and local interest rates.

 

It is noteworthy that the CBE allows subscribing to these T-bills for both local banks and foreign institutions, with a minimum subscription of $100,000 and its multiples.

 

Banks subscribe to US dollar-denominated treasury bills in the same manner as they do for local currency T-bills, in which each bank submits its bid to the CBE, indicating the amount it will subscribe to in the bills and the interest rate it requests, and the bids are collected at the Central Bank for study and acceptance of the appropriate ones.

 

The rate of return on these dollar bills is determined by a number of factors, the most important of which are the amount of dollar liquidity in the market, alternative investment opportunities available to domestic and foreign banks and financial institutions, and the country’s credit rating.

Egypt’s central bank cancels letter of the credit requirement for imports

According to Egypt Today, the Central Bank of Egypt (CBE) announced yesterday cancelling the letter of credit (LC) system as a requirement for imports.

The CBE said in a statement that it decided to restore the documentary collections system for imported goods.

The decision to implement the LCs system, which has been in effect since March, required Egyptian banks to accept only LCs for imports in order to reduce dollar outflows from the country.

The LCs necessitate transactions between two banks at a higher cost and for a longer period of time, with payments made in advance. On the other hand, the documentary collections system allows direct transactions between importers and exporters, with the bank only acting as an intermediary.

Late in October, the CBE announced plans to start phasing out LCs for imports by December.

The CBE’s February decision to oblige banks to deal with LCs was blamed for causing Egyptian ports to be full of stuck goods worth billions of dollars.

On Sunday, the Egyptian Cabinet announced plans to release goods at the ports, especially food products, medicines, and production requirements.

According to statements made this week by Cabinet spokesman Nader Saad, Egypt succeeded in releasing about $5 billion worth of goods in the ports from the beginning of this month until the 23rd, while the value of the goods withheld now amounts to about $9.5 billion.

Saad said the government has developed a plan to release the remaining goods in the ports during the next short period.

CBE warns against the misuse of credit, and debit cards

The Central Bank of Egypt (CBE) has asked banks to contact customers, via any means of communication, to warn them against the misuse of credit and debit cards.

The warning targets customers who are not travelling abroad.

According to a statement issued on Thursday by the CBE, some credit and debit cards are being used in transactions outside Egypt even though their owners are still in the country.

CBE added that a decision has been issued on December 1 to ban bank customers from obtaining hard currency to travel overseas if they are not leaving the country.

It stated that banks should review the use of such cards in any transactions conducted outside the country by customers who are not travelling abroad regularly.

CBE asserted that banks, which have noticed a recurrent use of such cards in ways that are contradictory to the nature of the customers’ usage, should report the incidents to the Central Administration to report any credit risks.

If it is proven that the customers did not travel abroad or misuse the cards, the banks will immediately suspend the cards and notify the customers as well as the Egyptian Credit Bureau “I-Score” to take any necessary procedures, according to the statement.

Cabinet: No instructions from CBE to halt financing for importing some commodities

The Cabinet’s media center has denied reports circulated by some social media websites alleging that the Central Bank of Egypt (CBE) has issued instructions to halt providing the necessary financing for importing a number of commodities, including cars and mobile phones.

The media center said in a statement Friday that it has contacted the CBE, which dismissed such reports stressing that a post circulated in this regard is fake.

The statement noted that all legal measures will be taken against the rumor-mongers.

CBE explains reasons for raising interest rates by 300 bps

The Monetary Policy Committee (MPC) decided to raise the Central Bank of Egypt’s (CBE) deposit rate, overnight lending rate, and the rate of the main operation by 300 basis points to 16.25%, 17.25%, and 16.75%, respectively. The discount rate was also raised by 300 basis points to 16.75%.

The MPC said the move was prompted by its desire to suppress intensifying inflationary pressures and achieve the target inflation rate.

It also stated in a statement issued yesterday evening that expectations for global commodity prices have slowed compared to previous ones floated during the committee’s previous meeting.

It stated that global financial conditions have stabilized as major central banks warned of the possibility of inflation rates reaching their peak and then falling. However, several factors continue to contribute to uncertainty, including ongoing tensions between Russia and Ukraine, the impact of the conflict, and China’s decision to reduce its precautionary measures against coronavirus on the international supply chain.

On the local level, MPC initial data pointed out a recovery of economic activity in the third quarter of 2022 as the Gross Domestic Product (GDP) recorded a growth rate of 4.4 per cent compared with 3.3 per cent in the second quarter. This growth was backed by contributions from the agricultural sector, wholesale and retail trade and tourism.

MPC also stated that growth rates will continue to rise in the fourth quarter of 2022. In terms of the labour market, the unemployment rate was 7.4 per cent in the third quarter of 2022, up from 7.2 per cent in the second quarter.

Egypt’s central bank hikes interest rates 3%

According to Amwal Al Ghad, Egypt’s central bank has on Thursday decided to hike interest rates by 3 percent to contain inflationary pressures which is consistent with achieving price stability over the medium term.

The central bank’s Monetary Policy Committee (MPC) has raised the overnight deposit rate, overnight lending rate, and the rate of the main operation by 300 basis points to 16.25 percent, 17.25 percent, and 16.75 percent, respectively, the bank said in a statement.

The discount rate was also raised by 300 basis points to 16.75 percent.

“…, the MPC decided to raise key policy rates by 300 bps to contain inflationary pressures and to steer annual headline inflation rates towards its upcoming targeted levels. The committee notes that the future path of inflation remains a function of the cumulative tightening in its stance to date and the lag with which monetary policy tools operate.” the MPC statement read.

Egypt’s c.bank expects 200bps interest rate hikes next Thursday- Reuters poll

The Central Bank of Egypt (CBE) will raise its overnight interest rates by 200 basis points on Thursday, a Reuters poll predicted on Tuesday. This step will come as a try for CBE to quell soaring inflation after a sharp devaluation of the currency.

CBE may raise its deposit rate to 15.25 percent and its lending rate to 16.25 percent at its regular monetary policy committee meeting, according to 12 analysts’ expectations.

On the other hand, Mohamed Abu Basha of EFG-Hermes expects smaller rate hike “we project CBE to hike rates by 100 bps in an effort to signal continued monetary tightening amidst rising inflation expectations.”

For his side, Jacques Verreynne of Oxford Economics said, “with inflation having risen more than expected, we now expect the CBE to raise policy rates by a further 100 bps.”

In October, CBE has raised rates by 200 basis points at a surprise meeting as it allowed the currency to weaken by 14.5 percent.

Moreover, the bank had reached a staff-level agreement on a $3 billion financial support package with the International Monetary Fund (IMF).

Noteworthy, that the gap between the official and black-market rates against the dollar has continued to widen, with one dollar fetching about 24.70 pounds at banks while 33 pounds on the black market.

The Central Bank of Egypt said after its last meeting that prices would continue to exceed its inflation target range of 5-9 percent during the fourth quarter.

CBE announces new measures to control proceeds of gold exports

The Central Bank of Egypt (CBE) issued on Sunday a circular to the banks on the requirements related to controlling the proceeds of gold exports.

The requirements instructed the banks to disclose the details of clients who fail to transfer the proceeds of the gold exported by Egypt, within seven days from the shipment date and additional three days.

In this case, CBE would send to the banks the details of the client to ensure excluding the client from any similar future transactions.

Additionally, the bank has to update the Trade Ministry, Customs Authority, and other bodies concerned with this regard.

The Central Bank of Egypt issues LE 27.5 in T-bills

On behalf of the ministry of finance, the Central Bank of Egypt (CBE) is issuing a treasury bill (T-bills) in the amount of EGP 27.5 bn.

These T-bills are supplied in two installments, the first one estimated EGP 7.5 bn with a 91-day term, while the second amounts to EGP 20 bn with a 273-day term.

Throughout December, 27 bids and a value of EGP 270 bn in bonds are set to be provided by the Ministry of Finance, serving its plan to borrow EGP 878.5 bn from the local market within the new fiscal year’s second quarter.

The government regularly offers T-bills and bonds from the banks operating in the Egyptian market to cover the general budget shortage of the state; these banks are considered the biggest investing sectors.

The governments take loans using T-bills and bonds over variant time intervals, government banks being the biggest buyers of them.

The Ministry of finance had unveiled that the outstanding balances of local bonds and treasury bills have reached EGP 4.4.348 trill. by the end of October 2022.

The Ministry’s most recent report revealed that the volume of outstanding balances of bonds was valued at EGP 2.580 trill. by the end of October, whereas the treasury bills reached EGP 1.767 trill.