Egypt Takes Steps to Boost Forex Reserves with $1 Billion Treasury Bill Auction

Egypt's Efforts to Stabilize the Economy

On February 5th, the Central Bank of Egypt (CBE) announced its plan to hold an auction for dollar-denominated treasury bills (TB) worth $1 billion. This initiative is part of the CBE's ongoing efforts to stabilize Egypt's teetering economy. The primary objective of the TB auction is to alleviate the pressure on the country's foreign exchange reserves.

Prior Measures and Challenges

Before this recent auction, the CBE had already sold one-year TBs worth $850 million in December 2023. Despite these measures, the Egyptian pound continues to face challenges.

To address these challenges, the CBE raised overnight interest rates by 200 basis points just days before the TB auction. This led to a surge in the lending rate to 22.25% and the deposit rate to 21.25%. The purpose of this interest rate hike is to curb inflation and stabilize the economy. The decline in Egypt's headline inflation rate to 33.7% indicates some success in the CBE's efforts, according to a report in the Middle East Economy.

Exchange Rate Dynamics

The pound's parallel market exchange rate against the US dollar briefly touched a record low of EGP75 for every dollar, as reported by Xhinua. However, the currency's official exchange rate against the dollar remains at EGP31:USD1.

Furthermore, the funding agreement between Egypt and the International Monetary Fund (IMF) has played a role in the pound's resurgence. Reports suggest that the scope of Egypt's program with the IMF may expand from $3 billion to $10 billion. This news has contributed to the pound's nearly 40% gain against the dollar, as stated in a February 5th report by Alarabiya News.

Critics' Perspective

Despite the optimism surrounding the IMF agreement, some critics, like Steve Hanke, a professor at Johns Hopkins University, express skepticism about Egypt's economic prospects. Hanke points to Egypt's high inflation rate, which he estimates to be at 139%, as evidence for his viewpoint. Additionally, he highlights the country's high debt as another reason for concern.

In conclusion, Egypt's decision to hold a $1 billion treasury bill auction is part of its ongoing efforts to stabilize the economy and boost foreign exchange reserves. While the pound faces challenges, initiatives such as interest rate hikes and the IMF agreement offer hope for its recovery. However, critics remain cautious about the country's economic outlook. What are your thoughts on this story? Let us know in the comments section below.

Frequently Asked Questions

How is gold taxed within an IRA?

The tax on the sale of gold is based on its fair market value when sold. If you buy gold, there are no taxes. It is not considered income. If you decide to make a sale of it, you'll be entitled to a taxable loss if the value goes up.

As collateral for loans, gold is possible. Lenders try to maximize the return on loans that you take against your assets. This often means selling gold. There's no guarantee that the lender will do this. They may just keep it. They may decide to resell it. In either case, you risk losing potential profits.

To avoid losing money, only lend against gold if you intend to use it for collateral. You should leave it alone if you don't intend to lend against it.

Should You Invest in gold for Retirement?

It depends on how much you have saved and if gold was available at the time you started saving. Consider investing in both.

You can earn potential returns on your investment of gold. This makes it a worthwhile choice for retirees.

While most investments offer fixed rates of return, gold tends to fluctuate. Because of this, gold's value can fluctuate over time.

But this doesn't mean you shouldn't invest in gold. Instead, it just means you should factor the fluctuations into your overall portfolio.

Another advantage to gold is that it can be used as a tangible asset. Gold is much easier to store than bonds and stocks. It is also easily portable.

Your gold will always be accessible as long you keep it in a safe place. You don't have to pay storage fees for physical gold.

Investing in gold can help protect against inflation. Because gold prices tend to rise along with other commodities, it's a good way to hedge against rising costs.

A portion of your savings can be invested in something that doesn't go down in value. Gold rises in the face of a falling stock market.

Investing in gold has another advantage: you can sell it anytime you want. Like stocks, you can sell your position anytime you need cash. You don't have to wait for retirement.

If you do decide to invest in gold, make sure to diversify your holdings. You shouldn't try to put all of your eggs into one basket.

You shouldn't buy too little at once. Start with just a few drops. Then add more as needed.

Don't expect to be rich overnight. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.

While gold may not be the best investment, it can be a great addition to any retirement plan.

How much of your portfolio should be in precious metals?

This question can only be answered if we first know what precious metals are. Precious Metals are elements that have a very high relative value to other commodities. This makes them highly valuable for both investment and trading. Gold is by far the most common precious metal traded today.

There are however many other types, including silver, and platinum. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It also remains relatively unaffected by inflation and deflation.

All precious metals prices tend to rise with the overall market. That said, they do not always move in lockstep with each other. For instance, gold's price will rise when the economy is weak, while precious metals prices will fall. This is because investors expect lower rates of interest, which makes bonds less attractive investments.

However, when an economy is strong, the reverse effect occurs. Investors favor safe assets like Treasury Bonds, and less precious metals. They are more rare, so they become more expensive and less valuable.

It is important to diversify your portfolio across precious metals in order to maximize your profit from precious metals investments. Because precious metals prices are subject to fluctuations, it is best to invest across multiple precious metal types, rather than focusing on one.

Can I have a gold ETF in a Roth IRA

A 401(k) plan may not offer this option, but you should consider other options, such as an Individual Retirement Account (IRA).

Traditional IRAs allow contributions from both the employer and employee. Another way to invest in publicly traded companies is through an Employee Stock Ownership Plan.

An ESOP can provide tax advantages, as employees are allowed to share in company stock and the profits generated by the business. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.

You can also get an Individual Retirement Annuity, or IRA. An IRA lets you make regular, income-generating payments to yourself over your life. Contributions to IRAs can be made without tax.


  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (
  • The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (
  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (
  • Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (

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How To

A growing trend: Gold IRAs

Investors are increasingly turning to gold IRAs as a way to diversify and protect their portfolios from inflation.

Gold IRA owners can now invest in physical gold bullion or bars. It can be used for tax-free growth and provides an alternative investment option for those concerned about stocks and bonds.

A gold IRA allows investors to manage their assets without worrying about market volatility. Investors can use the gold IRA for protection against inflation and potential problems.

Investors also benefit from physical gold's unique properties, such as durability and portability.

Additionally, the gold IRA has many benefits. It allows you to quickly transfer your gold ownership to your heirs. The IRS doesn't consider gold a commodity or currency.

This is why the gold IRA has become increasingly popular with investors looking to provide financial security during times of financial uncertainty.

By: Terence Zimwara
Title: Egypt Takes Steps to Boost Forex Reserves with $1 Billion Treasury Bill Auction
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Published Date: Tue, 06 Feb 2024 10:00:57 +0000

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