05:52 PM
Monday 19 September 2022
I wrote – Manal Al-Masry:
Bankers, whom Masrawy spoke to, expected that the Central Bank would resort to offering a high-return certificate once more through the Al-Ahly and Egypt banks, as one of the cards available in his hand to curb inflation, especially with the approach of reaching an agreement with the International Monetary Fund and the prospects of devaluing the pound.
Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund, said in an interview with Al-Arabiya TV yesterday that negotiations to obtain new financing are continuing with Egypt, and things are progressing according to the schedule.
He added that the rise in interest rates is linked to inflation jumps, so the monetary policies of central banks resort to raising interest rates to curb inflation, and “it is a priority for all countries, including countries in the region.”
The Central Bank had allowed Al-Ahly Bank and Egypt to issue a certificate with a high interest rate of 18% per year for a year on March 21, in an attempt to curb inflation and provide a real return on customer savings, before it was suspended at the end of last June, with a total proceeds of 750 billion pounds.
Mohamed Badra, a banking expert, told Masrawy, that it is necessary for the Central Bank to resort to offering a high-return certificate of at least 18% through government banks, coinciding with its decision at the Monetary Policy Committee meeting next Thursday with the aim of providing a real return on customers’ savings above the inflation rate. .
The Central Bank will hold a meeting of the Monetary Policy Committee next Thursday, September 22, to discuss the fate of the interest, in the second meeting of the Committee following Hassan Abdullah assumed his position as acting governor of the Central Bank.
Badra explained that the return on customers’ savings currently in banks is negative and is not in line with high inflation, which makes the value of investing in banks unattractive, and some customers may fall under attempts to erect from (comfortable).
The core annual inflation rate reached 16.7% last August, a level that has not been recorded for years, according to central bank data, and exceeding the central bank’s inflation targets at 7%, with an increase or decrease of 2% during the fourth quarter of 2022.
The annual inflation rate in cities rose last August to 14.6 percent, compared to 13.6 percent in July, according to data from the Central Agency for Public Mobilization and Statistics.
Banking expert Sahar Al-Damaty agreed with Badra’s proposal regarding the high certificates, while she expected the Central Bank to raise interest rates at its meeting on Thursday by 1% to maintain the attractiveness of investment in the Egyptian pound through the presence of a real return.
The real rate of return is the nominal interest rate earned by the saver or investor minus the inflation rate, which is currently negative.
But the deputy head of international transactions in one of the banks, said that it is not easy to expect to raise the interest rate, especially with the expected decision from the US Federal Reserve, but it is possible that the central bank will resort to offering the high-return certificate in the event of the completion of the International Monetary Fund loan to face the possible inflation from the decline of the pound while meeting the credits Documentary in banks.
The banker explained that the International Monetary Fund loan agreement will help open the door to meet the documentary credits that have been suspended in banks for months, which leads to a great demand for the dollar, which pushes the pound to decline further, and the Central may resort in this case to agree to offer a high-return certificate to absorb Expected inflationary pressures.
The average price of the dollar once morest the pound rose by 23.4%, compared to its current level with what it was on March 20, at 15.76 pounds.