TELECOM EGYPT IPO STRENGTHENS EGYPTIAN POUND
Egypt's currency has strengthened modestly in recent days, buoyed by demand for the pound by investors seeking to take part in the partial privatisation of Telecom Egypt (TE), economists commented. The pound strengthened from 5.76 to the dollar to 5.74 pounds in one week as investors converted dollars to the Egyptian currency to take part in one of Egypt's biggest privatisations, which closed last Wednesday. Before the privatisation the pound had hovered around 5.76 to the dollar for weeks.
"Previously they (investors) kept their savings in U.S. dollars, but many converted to Egyptian pounds to subscribe to the Telecom Egypt IPO," EFG senior economist Hany Genena said. As well as domestic investors converting savings in dollar accounts to Egyptian pounds, an economist said inflows of foreign cash for the IPO had also strengthened the pound. "It was the flow of funds from outside of Egypt ... Most of the investors in TE were foreigners," the economist, who asked not to be named, said. Once the IPO closed, economists said government debt issues, including a 2 billion pound bond, helped keep the pound strengthening. The Egyptian pound has been strengthening steadily as more foreigners invest in Egypt after an improvement in the economy on the back of government reforms. The government has said it would prefer to see a weaker currency to ensure exports stay competitive.