The Central Bank of Egypt likely to delay interest-rate hike to safeguard against EGP devaluation

The Central Bank of Egypt likely to delay interest-rate hike to safeguard against EGP devaluation

The Central Bank of Egypt (CBE) would likely put off any pick-up in interest rates and wait out inflation to rise until it has adequate foreign-currency reserves to handle another currency devaluation, Bloomberg reported on June 22nd. However, time is running out as the government attempts to raise billions of dollars soon through sales of assets in state-owned companies. According to Goldman Sachs Group’s estimations, the CBE would need over $5 billion to “enable the orderly transition to a unified, market-clearing exchange rate.” Meanwhile, derivatives traders have unwound bets that government would allow the pound to drop sharply in the coming months. Therefore, the Monetary Policy Committee (MPC) will probably leave interest rates on hold at its meeting on June 22nd. In a Bloomberg survey, all, except for three economists of 15 forecasters, expect the benchmark to stay at 18.25% for a second consecutive month. “Both foreign-exchange and interest-rate adjustments will likely be postponed until after more substantial asset sales materialize,” Carla Slim, an economist at Standard Chartered Plc, said. Copyright © 2022 Arab Finance Brokerage Company All rights reserved. Provided by SyndiGate Media Inc. ( Syndigate.info ).