The Egyptian stock exchange said trading will resume Sunday, while massive protests that have roiled the country for the past two weeks panicked investors and pushed the country's currency to near six-year lows.
Also Monday, the government also drew offers on 13 billion Egyptian pounds ($2.2 billion) in Treasury bills — a bid to raise cash that many analysts and economists predicted would attract only domestic buyers. The Central Bank had originally intended on offering 15 billion pounds in a variety of three, six and nine months bills aimed at shoring up support for the financial sector a day after banks reopened.
The banks had been closed for a week amid the demonstrations demanding President Hosni Mubarak's ouster. The protests, which saw tens of thousands of people massing in downtown Cairo for demonstrations that at times turned violent, have raised questions about the impact on the economy.
By reducing the T-bill offer, Central Bank officials "are reducing market expectations, and if they meet those expectations, they will look very good," said John Sfakianakis, chief economist at the Riyadh, Saudi Arabia-based Banque Saudi Fransi.
The sale was part of the government's attempt at restoring a semblance of normalcy in Egypt while mitigating the potential financial and economic fallout from the unrest that has caused tens of thousands of tourists to flee the country.
Dubai-based brokerage Exotix Ltd. said 7 billion pounds in 3 month Treasury bills were sold, with an average yield of 10.972 percent; 4 billion pounds in 6 months bills were accepted with an average yield of 11.484 percent and 2 billion pounds in 9 month bills were accepted with an average yield of 11.657 percent.
The issue was successful seeing as it came in below 12 percent, Ahmad Alanani, Exotix's director of Mideast fixed income sales, said in an e-mail, adding that it reflected a "vote of confidence from local banks."
"A successful auction of this size taken up by local banks would send all the right signals that the Egyptian debt markets are back in business," he said.
The Egyptian Exchange said Monday it had "taken the necessary steps to ensure orderly operations" for brokers and other companies in the exchange, and it promised to announce details of the changes and measures to be implemented later. The market saw its benchmark index plummet about 17 percent in two days of trading before the market closed on Jan. 27.
Analysts and brokers have been worried that the unrest would result in a massive sell-off as investors fled the market. The delay in the restart of the bourse's operations for a week after banks reopened appears to be part of an effort by officials to test investors' resolve and allow some time to pass to cool fears.
Those fears appear to be well founded.
A day after banks reopened on an abbreviated schedule following a weeklong closure, the Egyptian pound sank against the U.S. dollar, approaching near January 2005 lows. The pound stood at about 5.9540 to the dollar. It had been trading at about 5.84 for much of last week, and economists expected the test would come at the 6 to 6.1 pound to the dollar level.
Analysts have predicted it could drop as much as 25 percent in the short-term, a level that would put it at weaker than 7 pounds to the dollar.
International ratings agency Moody's Investors Service said it expects pressure on the Egyptian pound's exchange rate because of the conversion of local currency deposits to foreign currency deposits as the banks reopen.
"The flow will mainly come from foreign investors and high net-worth local depositors, and is likely to diminish the (Central Bank's) foreign currency reserves its capacity to support the banking system's overall foreign currency obligations," Moody's said in a report released Monday.
"Sustained demand to either withdraw or convert deposits into foreign currency is a key heightened risk for Egyptian banks' liquidity positions," Moody's said.
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