Banks in Egypt hold breath for Central bank meeting Thursday
ALBWABA – Credit rating agency Moody’s announced on Wednesday that the credit rating of five banks operating in Egypt may be downgraded and that they are currently under review.
Meanwhile, the Central Bank of Egypt is slated to hold their third meeting this year, Thursday, on policies pertaining to Egypt’s economic and monetary outlook.
Overall, since the Russian-Ukrainian crisis erupted, around $22 billion have left the Egyptian market.
Egypt currently is facing an acute shortage of foreign currency despite allowing the pound to devalue sharply in the past few months.
Moody’s said that the slow progress in the asset sale strategy weakens foreign exchange liquidity in Egypt and undermines confidence in the Egyptian currency.
The overnight interest, overnight lending, and main transaction rates, currently stand at 18.25 percent, 19.25 percent, and 18.75 percent, respectively. Whereas the credit and discount rate stands at 18.75 percent.
The Research Department of HC Securities and Investment told Investing.com, Wednesday, that the central bank is expected to raise interest on deposits and overnight lending by 100 basis points.
Heba Mounir, of HC Securities, said the rate hike would be for reasons, among others, to attract foreign investors and help curb inflation as well.
"The recent decline in the inflation rate will be short-lived,” adding that HC Securities expects “inflation to rise by 1 percent on a monthly basis in May."
A Reuters poll, however, conducted on Monday, showed that the central bank is expected to leave overnight interest rates unchanged, in light of a slight decline in April inflation rates.
The average forecast of 14 analysts, according to Investing.com, is that the central bank will keep interest rates on deposits at 18.25 percent, and 19.25 percent on lending.
Three analysts expected an increase in interest rates by 100 basis points, and a fourth analyst expected an increase of 200 basis points, the investment platform reported.
