The NBE and Banque Misr offered certificates of deposit with an 18 percent interest over one year on Monday, shortly after the unscheduled meeting held by the Monetary Policy Committee (MPC) of the central bank of Egypt (CBE), where the bank raised the key interest rates by 1 percent (100 basic points).

The two banks also announced that US dollar sales increased on Monday by over 50 percent compared to Sunday.

Following the interest rate hike, the CBE raised on Monday the US dollar trading price against the Egyptian pound to EGP 18.1 for buying and EGP 18.2 for selling, up from EGP 15.6 and EGP 15.7, respectively, the day before.

The rise is the highest since the implementation of the IMF-backed economic reform programme in 2016, which involved floating the Egyptian pound.

In a presser held on Monday, CBE governor Tarek Amer said that the Egyptian pound devaluation represents a correction of the exchange rate, and reflects the economic and monetary conditions in the global market at present.

Goldman Sachs said on Monday that the new monetary policy decisions taken by the CBE will have a positive impact on Egypt’s economy and increase investment capital flows into the Egyptian debt market.

Egypt’s Cabinet is anticipated to discuss an incentive procedures package for the stock exchange to support it against the ongoing economic challenges, according to spokesperson Nader Saad.

Goldman Sachs and Capital Economic said that these actions could pave the way for a fresh deal with the IMF to address the financial and monetary challenges placed by the Ukrainian conflict and its associated repercussions as well as the already-existing impacts of COVID-19.

Responding to the challenges imposed by the pandemic, the IMF gave Egypt two loans in 2020. One of them was disbursed as an immediate single tranche under the Rapid Finance Instrument worth around $2.7 billion to address the pandemic’s repercussions by providing the required liquidity in the domestic market.

The other loan was extended over two tranches under a one-year programme –which ended in June 2021 – through the Stand-by Arrangement (SBA) with a total value of about $5.4 billion.