Egypt’s new high-yield savings certificates are part of “temporary and exceptional” procedures and will not last long, sources told Amwal Al Ghad on Tuesday.
The certificates, issued earlier on Monday following the central bank’s 100 basis-point rate hike, aim at encouraging citizens who maintained dollar balances to convert to the Egyptian pound and to help the state overcome inflationary pressures.
On Monday morning, the central Bank of Egypt convened unscheduled monetary policy meeting to hike key interest rates for the first time in five years. The overnight deposit rate, overnight lending rate, and the rate of the main operation were raised to 9.25 percent, 10.25 percent, and 9.75 percent, respectively. The discount rate was also hiked by 100 points to 9.75 percent.
The central bank also devalued the pound by more than 14 percent against the U.S. dollar. As a result, two of biggest state-run banks the National Bank of Egypt (NBE) and Banque Misr announced new savings certificates with an unprecedented interest rate of 18 percent
“These certificates are a result of exceptional and temporary measures to encourage people to maintain local-currency balances and to help the state overcome implications of global inflationary pressures.” the sources further told Amwal Al Ghad on condition of anonymity.
“The interest rates of these certificates are too high … It is just a short-term tactical move to fix the market,” they added. “Banks will not continue issuing the certificates for long once we achieve its target.”
