I wonder why suddenly we started hearing about the expulsion of foreigners from Egyptian religious instruments? What happened? Does the situation pose a threat to the economy? How is all this related to the dollar and the exchange rate? More importantly, do you hope things will improve soon?
In recent days, talk about the withdrawal of foreigners from Egyptian debt instruments has been on the minds of many people. This is because the numbers speak alone. From the beginning of November until now, foreigners have sold government debt securities worth more than 1.13 billion dollars.
Why did foreigners decide to withdraw their money in this way? Does this mean that the market is in crisis?
Let us start with the first and most important thing…the dollar…the price of the dollar against the pound has become a factor of great pressure on investors. With every new rise in the dollar, foreigners find that the value of their investments in debt instruments in the pound decreases. This simply means that the return they were earning in the pound weakens when they convert them to dollars…and this It made them think and say, “Why do we wait?” However, the geopolitical tensions in the region, whether in Syria or other regions, made investors feel more unstable. He always lets capital move to safer areas
Although returns on short-term treasury bills in Egypt continued to reach 31.4%. This is a very large number compared to other countries, but even this high return is not able to entice foreign investors… because with expectations of the continued weakness of the pound, any gains they achieve will be eroded by the dollar… At the same time, there is a clear trend towards short-term instruments more than long-term… investors. They go in for quick things, take a small gain, and leave before the exchange rate puts more pressure on them
Does this mean that the market has completely lost confidence?
Not necessarily. Muhammad Al-Najjar, Director of the Debt Instruments Unit at Nair Consulting Company, said that the market is not dead… but there is a state of anticipation and waiting, meaning investors are waiting to see what will happen in the coming period, whether at the level of monetary policy or developments in the exchange rate… On the other hand, rates have declined. Inflation in Egypt is at a slight rate of 25.5%. I might hope that the Central Bank stabilizes interest rates a little to some extent. The picture explains more
In conclusion, the exit of foreigners is not new, but the severity of it this time has caused concern for some.. The situation requires deliberate moves in order to restore confidence to the market and stabilize the pound in front of the dollar.. The important question now is: Will the government be able to balance attracting investments and protecting its economy?
In the coming days, we will know more details.. And all the time we will tell you what is new and we will explain to you what is happening behind the scenes.. Always stay with us.
