The USD makes jump to EGP 55

Here are the stories driving the day both at home and abroad. The USD crossed the EGP 55 threshold today, hitting a record high. The Central Bank of Egypt (CBE) quoted USD 1 at EGP 55.24 for buying and EGP 55.38 for selling, while the National Bank of Egypt quoted EGP 55.25 and EGP 55.35. Former head of the Industrial Development Bank Maged Fahmy tells EnterpriseAM that “the move was expected given rising geopolitical tensions in the region, higher global energy prices, and a growing external debt service burden.”

The need for USD to cover foreign outflows pushed the rate to a record high, Fahmy says, expecting it to climb further. Veteran banker and former Banque Misr deputy chair Sahar El Damaty indicates that pressure on key sources of foreign currency, along with portfolio investment moving out of emerging markets and into the US market as interest rates and yields shift, is behind the demand drive. Int’l investors have been offloading gov’t debt since Monday: Foreign investors net sold c. EGP 73.8 bn of T-bonds and T-bills on the EGX between Monday and Wednesday, according to EGX data, and preliminary figures show a further EGP 39.2 bn in net foreign selling across all securities today. The exit has been concentrated in debt.

Regional investors absorbed part of the exit. They net bought c. EGP 12.6 bn of T-bonds and T-bills between Monday and Wednesday, offsetting roughly a sixth of the foreign selling, by our math. All of it came on Tuesday, when they net bought EGP 12.8 bn of debt, against small net sales on Monday and Wednesday. Combined, regional and foreign investors net sold USD 1.13 bn (EGP 61.1 bn) of local debt over the three days. Regional investors turned net sellers of EGP 1.2 bn across all securities today, according to preliminary figures.

Equities had a rough day too: The EGX30 shed 3.41% today to settle at 51.1k points, wiping out its gains from Tuesday and Wednesday. It closed at its session low, giving up c. 1.8k points from yesterday’s close of 52.9k, by our math. It was the index’s second steep drop of the week, after a 2.6% slide on Sunday, leaving it down c. 2.3% since last Thursday, by our math. The index is still up 22.05% so far this year. EGX30 constituents traded EGP 4.1 bn, or 50.5% of the day’s total value, but accounted for only 11% of shares traded. Foreigners were small net buyers of listed stocks, excluding block trades, every session from Sunday through Wednesday.

The CBE faces a tricky call: Fahmy expects the central bank to hike rates at the Monetary Policy Committee meeting next Thursday to curb dollarization and further inflation. El Damaty expects a hold while the bank watches inflation, adding that currency swap agreements give it an extra tool to ease some foreign currency pressure, though they don’t replace the need to build up traditional sources of foreign currency.

New logistics hub coming to Dekheila Port: The Alexandria Port Authority signed an MoU with Hassan Allam Utilities and Al Tareeq Capital for Real Estate Asset Management to build, develop, and operate an integrated logistics center at Dekheila Port, according to separate statements (here and here, pdf). The project will span some 273k sqm in the port’s western hinterland, on a plot set to be folded into the port’s customs zone, positioning it as a regional and international hub for distribution, re-export, and value-added services.

The center will house storage, handling, distribution, re-export, final processing, and light industry, alongside improved services for exporters and importers — a package aimed at sharpening the port’s competitiveness in global supply chains and trade. Under the agreement, the parties are now working to meet the applicable conditions and secure the necessary approvals before construction begins.

^^ We’ll have more on this story in Sunday’s edition of EnterpriseAM.

HAPPENING TOMORROW- Banque Du Caire’s (BdC) institutional book closes tomorrow, having sold out within hours of opening on Monday. Qualified investors have until Friday to put in orders for the state-backed lender’s IPO, which has so far secured cornerstone investments from four foreign funds, namely Helikon, Redwheel, Sustainable Capital, and Waha Investments. The final offer price will be announced on Monday, 26 October, and the retail book stays open until Wednesday, 28 October. The retail tranche was 1.98x covered as of Thursday’s close, with buy orders totaling 454 mn shares, a senior government official tells EnterpriseAM.

It’s still not too late for an upsize: Banque Misr, the selling shareholder, has until Sunday, 25 October to announce any increase in the stake on offer (from the current 30% to as much as 45%), with any upsize requiring at least three days’ notice before retail subscriptions close.

ICYMI- Banque Misr is selling some 4.575 bn shares, or 30%, of BdC in what is on track to be the heftiest EGX IPO in USD terms in at least five years. The fully secondary offering is set to raise some EGP 22.05-24.25 bn (c. USD 410-455 mn at the circular’s EGP 53.46 rate) in gross proceeds, barring an upsize, and is considered a major test of foreign appetite for Egyptian equities.

☀️ TOMORROW’S WEATHER- Cairo is in for another moderately warm day tomorrow, with the mercury set to peak at 30°C under hazy sunshine before dipping to a clear 20°C overnight, according to our favorite weather app.

MAKING HEADLINES ABROAD-

Dominating the global headlines this afternoon is Russia’s overnight “massive missile” attack on Kyiv, just hours after Russian President Vladimir Putin told US envoy Steve Witkoff that Russia was willing to restart three-party peace talks with the US and Ukraine in early November. The ballistic missile strikes killed two people and wounded 22, including four children. Numerous sites across the city were hit, including civilian buildings and energy infrastructure. Russia also reported over 600 drones launched by Ukraine toward Moscow during the night.

CLOSER TO HOME- Also making headlines is an order from the US Department of State to withdraw non-essential staff and their family members from its embassy in Riyadh as Iran-backed Houthi forces intensify their attacks. This follows a string of near-daily attacks against the kingdom, including an Aramco oil site and an eastern airport on Wednesday, where at least three people were killed. The order comes amid plans by the US and Israel to renew strikes on Iran after next month’s midterm elections.

IN TECH NEWS- The tech world is astounded at the discovery of critical vulnerabilities in PHP, an open-source programming language used to power around 70% of websites and web applications, forcing websites worldwide to shut down. PHP underpins platforms such as WordPress and Wikipedia, as well as parts of Slack and Facebook. Governments worldwide issued warnings about the vulnerabilities, which could allow hackers to access sensitive data, launch large-scale cyberattacks, and disrupt essential services. The agency recommended taking affected systems offline and released a patch for the bugs.