HC expects foreign inflows into T-bill market
Research Department at HC securities expects the inflows of foreign currency through the interbank systems to result in change in the FX rates reflecting supply and demand forces, supporting a floating currency mechanism.
HC however, expects commercial banks to show limited ability to support the Egyptian Pounds at current rates due to holding a net foreign liability position.
According to its record regarding Egypt macro economics, it projects that the EGP might be devaluated by 5-10 percent over 2019.
Accounting for the potential devaluation, HC expects inflation to average 16%-17% over 2019, hence they do not expect interest rate cuts throughout 2019
Foreign holding of Egyptian T-bills declined to $11.8 billion in October 2018 from $21.5bn in March, a total outflow of $9.7bn. Around $8bn of the outflows were covered by commercial banks shifting them to a net foreign liability position of $3.9bn as of September.
While the remaining $1.7 billion were covered from the repatriation of foreign investors fund which declined to $7.8 billion as of the end of October from $9.7 billion in March.