06:36 PM Wednesday, August 02, 2023
I wrote – Manal Al-Masry:
Bankers and economists, Masrawy spoke to, ruled out any noticeable impact of lowering the credit rating of the United States, whether on the American economy or with regard to the return of foreign investors in debt instruments to many emerging markets, including Egypt, because it maintained a high rating despite this downgrade, compared to the high risks in other countries. in the region.
Fitch downgraded the United States’ credit rating to (AA+) from (AAA), citing the financial deterioration over the next three years and frequent debt limit negotiations that threaten the government’s ability to repay its obligations.
Traders’ immediate reaction to the downgrade was to initiate an exit from US dollar and government bond investments, Reuters reported.
Hani Genena, an economist and lecturer at the American University, told Masrawy that there is no effect from downgrading America’s credit rating either on the American economy, or the return of investor flows from it to emerging markets, including Egypt.
Geneina added that America maintains a high credit rating at (AA+) after the downgrade, and it could begin to affect it if it is downgraded by another degree, and this is unlikely to happen in the long term.
The Russian-Ukrainian war caused indirect investments (government treasury bills and bonds) to exit by about $22 billion during the first half of last year.
Mahmoud Nagla, Executive Director of Money and Fixed Income Markets at Al-Ahly Financial Investments Company, said that downgrading America’s credit rating will not lead to the exit of its investors to emerging markets, including Egypt, who face high risks of inflation rates and exchange rate instability.
He added that foreign investors will remain in the US market, as it still has a high rating, but they may redistribute the weights of their investments in the stock market and US government bonds and turn to gold by a greater percentage.
Nagla said that Egypt and emerging markets may be affected by increased pressure to raise interest rates on their local currencies, as the decline in America’s rating may prompt the Federal Reserve to continue raising interest by 0.5% on the dollar again.
Last Wednesday, the Federal Reserve raised the interest rate by 0.25% for the fourth time this year, to a range between 5.25 and 5.5%, after raising it for the eleventh time since March 2022.
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2023-08-02 15:36:00
