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Egypt’s dollar bonds were lower by over 2% across the curve after a Russian ambassador said that the African nation moved towards joining the BRICS group of nations. Joining the BRICS could help Egypt move away from the US dollar and towards local or a joint currency for trading purposes. He added that the two countries were planning new trade agreements and were looking at “new mechanisms for mutual settlements in these trade operations”. Following three waves of currency devaluation, Egypt has been facing high inflation, a prolonged shortage of foreign currency and thus, delays in garnering imports. While joining the BRICS might be beneficial for Egypt to address its near-term needs, the move away from the dollar may create doubts on its ability to replenish forex reserves helpful in repaying offshore debts. Early last week, Egypt was said to be focusing on privatization with an effort to bringing in fresh hard currency and boost private-sector participation. The latest move now raises questions on the exact trajectory of Egypt’s policy.
Egypt’s 7.5% 2033s were down 1.4 points to 58.13, currently yielding 15.6%.
Separately, India is said to be providing Egypt with a credit line (amount not disclosed), as per the Egyptian Supply Minister. While a credit line has not been opened yet, discussions are underway with India and other countries about facilities to boost trade.