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Egypt’s state banks launch 12.5% interest rate to support EGP

by ChemOrbis Editorial Team -
  • 09/11/2015 (16:56)
According to local media sources, Egypt’s two largest state banks have launched savings certificates for Egyptian pounds with an interest rate of 12.5% in order to support the local currency, Egyptian Pound. This move, according to players, however, is increasing the likelihood of a Central Bank rate hike for next month.

Players in the finance sector commented that the average rates in Egyptian banks are at around 10% nowadays. Most banks are keeping their rates at around these levels in order to support the Egyptian Pound and to take some of the pressure off of foreign currencies. This means that the Central Bank will also need to raise their interest rates when they meet again otherwise these banks will be under low margin pressure.

According to these sources, Egypt’s foreign currency reserves stood at about $36 billion before the 2011 uprising and they were down to $16.4 billion at the end of October despite billions of dollars in Gulf Arab aid since mid-2013.

The official exchange rate for the Egyptian pound stood at 7.9301 against the dollar in October but the rate is still far from Saturday’s black market rate of 8.51 pounds against the dollar.
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