Egypt says foreigners invested $500m after devaluation

Foreign investors bought $500 million in Egyptian debt and stocks since the central bank devalued the currency this month, according to central bank Governor Tarek Amer, who said more measures will be taken to attract funds.

Amer, in a televised interview late on Saturday, said he expects at least $5 billion in portfolio investments — purchases of stocks and bonds — within the coming four months. Foreign direct investment from China alone could reach $30 billion in the next two years, he said.

The central bank allowed the biggest one-time depreciation of the pound since 2003 on March 14 and promised to adopt a more flexible exchange rate. The moves were designed to revive investor interest in Egypt to ease a dollar crunch that has hampered economic growth and fueled a black market for the currency.

Hard currency deposits in local banks, increased after the central bank started “to fix the status of the currency,” Amer said. The central bank will continue “arranging matters so that we have the ground ready to receive” the expected inflows, he said, without elaboration.

‘Greed and Speculation’

The pound weakened in the black market after the devaluation because of “greed and speculation,” and the central bank will take more measures to organize the market over the coming three months, he said, without giving more details. Egypt doesn’t suffer from a currency crisis but a “crisis in regulating the exchange market.”

Amer said the central bank also plans to sell stakes in three banks it owns or partially controls by the end of 2016. It will sell The United Bank to a strategic investor and raise Banque du Caire’s capital by selling a 20 percent stake on the stock market. The central bank and Kuwait investors also plan to sell 20 percent each of their stakes in the Arab African International Bank, Amer said.

The aim of the sale is to “boost the stock market,” he said.

– Bloomberg