Egypt's international bonds surged by more than two cents following the Central Bank's announcement today, Wednesday, of a 600 basis point increase in interest rates and a decline of the currency to unprecedented new levels, indicating the beginning of a long-anticipated currency devaluation. Data from "TradeWeb" showed that the longer-term bonds recorded the largest gains, with bonds due in 2047 rising by 2.6 cents to reach 82.3 cents.
The Central Bank of Egypt indicated that it raised interest rates by 600 basis points in an extraordinary meeting and will allow the exchange rate to be determined "according to market mechanisms," continuing efforts to transition toward a flexible inflation targeting framework.
The Central Bank announced that it raised the overnight lending rate to 28.25 percent and the overnight deposit rate to 27.25 percent as part of its decision to expedite the monetary tightening process to hasten the decline of inflation.
In a statement, the Central Bank affirmed its commitment to maintaining price stability in the medium term, emphasizing its role in safeguarding sustainable development needs. To achieve this, the Central Bank is committed to continuing efforts to transition to a flexible inflation targeting framework by maintaining inflation targeting as the nominal anchor of monetary policy while allowing the exchange rate to be determined by market mechanisms.
It added, "The unification of the exchange rate is a crucial measure, as it helps eliminate the accumulated demand for foreign currency after closing the gap between the official and parallel market exchange rates."
The Egyptian pound sharply declined against the dollar at the market's opening, surpassing 46 pounds per dollar from around 30.85 pounds.
The Chairman of Bank Misr announced to Extra News channel on Wednesday that the bank will issue three-year certificates with a decreasing interest rate of 30 percent for the first year, 25 percent for the second year, and 20 percent for the third.
