The Central Bank of Egypt (CBE) issued EGP19.8bn in T-bills on Thursday, surpassing the EGP18bn planned for the auction. Yields on the EGP9.2bn six-month tenor declined by 21bps to 17.392%, and yields on the EGP10.5bn 10-month tenor fell by 18bps to 17.329%. Submitted bids covered 3x the required amount, which drove the CBE to accept additional amounts on both maturities. The drop in the yields came alongside a continued EGP appreciation, with CBE’s midpoint rate strengthening 0.01% to EGP17.28 as of Thursday’s close. We reiterate our view that we are approaching some stabilisation in the USD-EGP following a YTD appreciation of 3.5%, with the EGP17.10 +/- being a short-term target, given that at this rate carry traders would start to be much less covered by their carry against any potential FX moves. We continue to foresee the USD-EGP trading within a band of EGP17.40/50-18.00 throughout the year. 

Mohamed Abu Basha