Egypt cancelled sales on Monday of 1-1/2 and three-year treasury bonds and saw yields jump on its seven-year bond, data from the central bank’s website showed.
Yields on Egyptian government debt have been rising since the central bank raised its key interest rates by 100 basis points last month to their highest level in years.
Seven-year debt was sold on Monday at a yield of 17.291 percent, up from 16.161 percent when the bond was last auctioned on June 13, just three days before the central bank rate hike.
Egypt’s Monetary Policy Committee (MPC) last month raised the overnight deposit rate from 10.75 percent to 11.75 percent and the overnight lending rate from 11.75 percent to 12.75 percent, its highest since 2008.
The central bank did not immediately say why Monday’s two bond auctions were cancelled, but one banker told Reuters that the bids submitted were considered very high.
Economists say the rate hikes were intended to rein in surging inflation and ease downward pressure on the Egyptian pound, which has weakened to around 11 pounds to the dollar on the black market compared to the official rate of 8.78.
Egypt’s urban consumer inflation accelerated to 14 percent in June from 12.3 percent in May, according to the state’s official statistics agency.
source: Ahram Online
