By Tom Pfeiffer and Mohamed Samir /Reuters
CAIRO: Egypt’s central bank sold more treasury bills than it originally offered at an auction on Thursday as optimism that the country may be over the worst of an economic crisis pushed yields down from historic highs.
It was the second decline for 182-day T-bill yields in two weeks. Around the turn of the year, the central bank was repeatedly missing its fund raising targets at T-bill auctions.
Egypt is negotiating an emergency IMF loan to help ward off a budget crunch and bolster a balance of payments deficit widened by weak tourism and inward investment since a popular uprising overthrew president Hosni Mubarak last year.
Next week could prove decisive as parliament meets to discuss the plans of the interim government, including fiscal reforms needed to secure the $3.2 billion loan. The IMF wants broad political support for the reforms.
But there is growing optimism that the country will weather the storm and pass peacefully through a presidential election to usher in a more effective permanent government in June.
Foreign reserves have tumbled to less than half their level before the uprising as the central bank sought to defend the local currency, but that drop slowed sharply in February.
“Many believe yields are not going any higher than these levels, so people don’t want to lose an opportunity,” said Ahmed Osama at Bank Audi in Cairo. “The fact that foreign reserves fell by less than $1 billion last month was a positive sign.”
The central bank sold LE 4.5 billion ($745.7 million) of 182-day T-bills instead of the LE 3.5 billion it had originally offered. The average yield edged down to 14.867 percent from 14.89 percent at last week’s auction.
It sold LE 4.5 billion of 357-day T-bills instead of the LE 3.5 billion it had sought. The average yield eased to 15.94 percent from 15.965 percent at the last issue on Feb. 28.
The central bank sells the bills on behalf of the Finance Ministry.