The Clap
The CBE made several critical decisions, including more flexible policies regarding the FX rate, increased interest rates, and the gradual elimination of documentary credits required for imports.
The Deets
The CBE is set to adopt a more flexible FX rate for the EGP against other currencies as it prioritizes the battle against inflation. The CBE said this decision will help improve foreign reserves.
The CBE also decided to increase interest rates by 2%, to become 13.25% for deposits and 14.25% for loans, after leaving rates unchanged during the previous meeting.
With regard to documentary credits required for imports, the CBE will gradually cancel the need for the document until its full cancellation in December 2022.
Response to Reforms
Egypt secured an aid package worth $9 billion, divided as follows:
- $3 billion from the IMF
- $5 billion from international financing institutions
- $1 billion from the IMF Sustainability Fund
So What
The CBE’s decisions, in addition to the aid package, increased investor confidence in the Egyptian economy and EGX, whose main index rose by 4.92%.
For a more comprehensive coverage of everything that happened on Thursday, click here
