Egypt may soon sell bonds that are priced in China’s currency the yuan.
Minister of Finance Mohamed Maait made the announcement yesterday alongside the People’s Republic’s Ambassador in Cairo Liao Liqiang. The move would help diversify Egypt’s financial resources and target China’s large bond market, the state-owned Al-Ahram reported.
Bonds are a type of financial security that represent the holder’s obligation to repay the buyer. Governments issue bonds to help finance their expenses.
Why it matters: Egypt has pursued several new bond strategies recently. The country is currently preparing to sell Islamic bonds. An Islamic bond, or sukuk, complies with Islamic law’s prohibition on usury. In February, Egypt named six banks to manage the future sukuk sale. Last year, Egypt issued bonds in Japan’s currency the yen.
The move could threaten the position of the US dollar as the world’s dominant currency. Many countries around the region sell bonds in dollars or their own currency. Doing business in yuan is becoming more appealing to some countries. Saudi Arabia is reportedly considering accepting yuan as payment for oil sales to China.
Know more: Egypt recently secured foreign investment from its Gulf allies to mitigate the economic fallout from the war in Ukraine. The war has wreaked havoc on Egypt’s wheat supply, for example.