Egyptian Economy and Currency Stability: Expectations of Central Bank Decision and Interest Rates

Investing.com – There have been a lot of positive signs lately for the Egyptian economy and currency. Recent data revealed the status of Qatar and Libya depositing short-term deposits at a value of $1.7 billion, which strengthens the foreign exchange position.

The news also revealed a development in Egypt’s position regarding the review of the International Monetary Fund, and that it is about to obtain the first and second batches of the review, after completing some of the required reforms.

The cut won’t happen soon

The chief economist at Jeffers International Economics commented on the position of the Egyptian pound that she now rules out devaluing the pound soon, justifying that by ruling out that the IMF would ask Egypt to lower the pound and that the focus would be on neutralizing government companies from the economy, accelerating offerings and raising interest rates to control inflation.

This coincided with the issuance of a report by Citigroup Bank stating that the Egyptian pound will not decline in the near future, which caused confusion among dealers in the black market, as the parallel market falters and declines whenever the expectations of the coherence and stability of the pound are strengthened through reports or statements.

The decision of the Central Bank of Egypt .. What are the expectations?

Many analysts are now ruling out a depreciation of the pound in the short term. This is evident in its stability recently, after rising in early May to record levels.

The Egyptian economy is currently awaiting the issuance of interest decisions by global central banks next week, before the Central Bank of Egypt issues its interest rate decision on June 22.

The balance is now tilted, after the rebound of inflation data from May, to rise and accelerate, after slowing down in April readings. Headline inflation data rose to 32.7% for May compared to 30.6% year-on-year in April. As for the core consumer price index, it recorded an increase of 40.3%, after increasing by 38.6% in April 2023. Increases in inflation suggest that the Central Bank will raise interest rates at its next meeting.

Investment bank LCI Capital expected the central bank to raise interest rates by 100 to 200 basis points over the remaining months of 2023, especially in light of expectations that inflation levels will continue to rise above 30%.

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