Egyptian pounds (Photo: AP)
The Egyptian pound strengthened against the dollar on Sunday, the first trading day after the central bank lowered its main interest rates by a full percentage point.
The currency strengthened to 16.22 to the dollar, its strongest since March 4, 2017, from 16.26 on Saturday.
“I think it is flow driven. There have been some inflows today,” said a Cairo-based banker.
The central bank cut interest rates by 100 basis points on Thursday, with overnight deposit rates lowered to 13.25% and lending rates easing to 14.25%.
“We are seeing hot money flooding the gates before the yields go down any further,” a second banker said. “The EGP carry trade is still the most attractive in the world.”
Egyptian pound treasury bills have been popular among foreign investors for their high yields and the country’s relatively stable currency.
Shares also rose on the Egyptian stock exchange on Sunday, with the main EGX30 index jumping 3.3% after anti-government protests called for Friday failed to gain traction.
Egyptian pound treasury bills eased, with the average yield on 91-day bills slipping to 15.605% from 15.627% last week and that on 273-day bills falling to 15.261% from 15.537% two weeks ago.
Egypt’s currency trades within a range managed by the central bank.