Following the central bank’s early Thursday morning increase in interest rates by 200 basis points, the Egyptians, Egypt, and Cairo banks took action.
After the central bank announced that it had switched to a permanent “flexible exchange rate mechanism,” the Egyptian pound dropped 14.5% to a record low versus the dollar.
This increase coincides with the disclosure of a $ 3 billion financing agreement over a 46-month period between Egypt and the International Monetary Fund.
The largest government in Egypt, Al-Ahly, issued certificates of 18% interest in March, when the currency likewise lost around 14 percent of its value versus the dollar. The certificates were valid for just one year and were intended to raise roughly 750 billion pounds (32. 47 billion dollars).
Samir Raouf, an analyst in the financial markets, said: “The Central Bank of Egypt resorted to the full float of the Egyptian pound in an exceptional step, to try to devour the black market, which exceeded the 23 -pound barrier of the dollar and it is expected to continue to rise due to its approximately 25 pounds, and thus increases the burdens of inflation, in a complementary step. for a method to lower inflation rates.
“The banks issued these certificates for this lengthy period to absorb any additional liquidity operations through certificates, limit the high financial markets, and attempt to rein in excessive inflation within the Egyptian economy, in an indication of the continuation of the heights significantly and directly in accordance with international reports issued by the World Bank and the Fund International criticism, with the continuation of economic turmoil until 2026, he continued.
Three Egyptian banks have issued certificates with a return of 17.25% after the pound fell.
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