Investors are flocking to buy Egyptian treasuries just weeks after the country received a massive bailout and devalued its currency.
Bids for 364-day bills rallied to over $8.5 billion in a single auction this month, marking the highest level ever recorded, according to Bloomberg.
The country has become attractive for so-called “carry traders” who borrow money at a low rate and invest where rates are high.
The Egyptian pound has strengthened against the dollar after depreciating by over 38 percent in a single day on March 6th. In a bid to attract foreign investment, the government simultaneously devalued its currency and dramatically raised interest rates.
“Investors had waited for an inflection point in the local market story to get involved in size in carry trade positions,” Samir Gadio of Standard Chartered Bank told Bloomberg.
Some analysts advise caution.
“Pouring money into a relatively small economy and sudden investment flows bring risks,” Thierry Larose, a portfolio manager at Vontobel Asset Management AG told Yahoo Finance. “I expect at some point in the future that the Egyptian government may make some mistake, then the exit door will be extremely narrow.”
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