The Central Bank of Egypt monitored the return of foreign investment flows in light of the temptations provided by the local currency's decline to its lowest level against the dollar in a week.
According to the Central Bank, the exchange market reacted positively to the recent depreciation of the pound, as it witnessed the entry of foreign investors to the Egyptian market, amounting to $925 million, since January 11th.
Egypt has been suffering from a severe shortage of foreign currency since the outbreak of the Russian-Ukrainian crisis last February, and the US interest rate hike over the past year. It is estimated that this resulted in the exit of more than $22 billion of foreign hot money invested in debt instruments (including bonds and treasury bills).
Before the war in Ukraine, Egypt succeeded, thanks to high-interest rates, in attracting foreign funds to the local market, in the form of investment in debt instruments. Foreign investments in government debt instruments ranged between $28 and $29 billion until the end of May 2021.
According to Standard & Poor's credit rating agency, Egypt has the highest real interest rate in the world, which makes debt instruments issued by the state attractive to foreign funds.
Source (Al-Arab London Newspaper, Edited)
