The Assets and Liabilities Committees (ALCO), which are in charge of setting interest levels in banks, will start Sunday to adjust the interest rates on their savings and loan products following the Central Bank of Egypt (CBE)’s decision to raise interest rates by 2% at once last Thursday evening.
The Monetary Policy Committee (MPC) of CBE decided to increase the basic interest rates by 2%, making them 21.25% for deposits, 22.25% for lending, and 21.75% for the credit and discount rates and the main operation of CBE.
As an immediate reaction in the market, interest rates on variable-return certificates and some loan products linked to the interest rates rose by 2%.
There are several variable-return savings certificates in the Egyptian market, such as the National Bank of Egypt (NBE)’s “platinum” certificate and Banque Misr’s “Al-Qimma” certificate, as well as many variable-return loan products.
The market is also waiting for the CBE’s decision on the return on government debt instruments.
On behalf of the Ministry of Finance, CBE will issue today, Sunday, two treasury bills worth EGP 62bn, the first with a value of EGP 35bn for a term of 91 days, and the second with a value of EGP 27bn for a term of 364 days.
The Ministry of Finance plans to issue 25 auctions for treasury bills and bonds worth EGP 540.25bn in February, including 16 bond auctions worth EGP 528bn and nine bond auctions worth EGP 12.25bn.
This is part of a plan through which the government plans to borrow EGP 1.647tn from the local market during the third quarter of the 2023/2024 fiscal year, to pay previous dues for debt instruments, and finance the state’s general budget deficit.
The market is also anticipating the impact of the interest rate hike on the performance of the stock exchange, which saw a collective increase in its indicators at the end of trading last Thursday, a few hours before the MPC meeting.
The market capital of the shares of the companies listed on the Egyptian Exchange (EGX) increased by EGP 43bn, closing at EGP 2tn and EGP 11bn after total trading reached EGP 12.5bn, which included EGP 7.3bn in bond and treasury bill market transactions.
The benchmark index EGX 30 closed with gains of 0.54%, reaching 28,434.37 points. The biggest jump was seen in the small and medium-sized stock index, EGX 70, which rose by about 4.79% to 6,630.12 points, and the EGX 100 increased by 4.2% to 9,362.72 points.
