THE WEEKLY
Thursday
24th March 2016
Issue # 13
THE CENTRAL BANK OF EGYPT
RAISES INTEREST RATES
The Monetary Policy Committee (MPC) at the Central Bank Of Egypt
(CBE) raised in its latest meeting on Thursday, 17th of March 2016 the
main interest rates by 1.5%.
Overnight deposit and lending rates were raised to 10.75% and
11.75% respectively. The discount rate was also raised by 1.5% to
11.25 %.
On the back of the interest rate hike, Egypt’s Treasury Bonds’ yields
increased significantly on Monday the 21st of March’s auction where
average yields on 1.5 year zero coupon T-bonds recorded 14.631% up
from 12.719% at the previous auction on 7th March, while the 3-year
T-bond yield recorded 15.115% compared to 13.408% and the 7-year T-bond yield recorded 16.921% up from 15.080% at the last
auction on 7th March.
“The CBE’s monetary policy will be geared towards maintaining price stability by avoiding double digit inflation rates
over the medium-term to maintain real incomes. Moreover, stable inflation rates are conducive to achieving sustainable
economic growth”
The CBE Statement
CBE Official Website
17th March 2016
“The move is consistent with inflation targeting as part of the CBE’s effective shift to a managed float regime”
Ziad Waleed
Economist At Beltone Financial
Ahram Online
17th March 2016
IN THIS ISSUE...
Partial Cabinet Reshuffle
CBE Cuts Number Of FOREX Auctions Per Week
Moody’s & Fitch Praise CBE Decisions
Suez Canal Revenues Decrease In February 2016
Egypt Signs Agreement With Saudi Fund For USD1.5 Billion
Terrorist Attack In North Sinai
A WORLD OF REAL POSSIBILITIES
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PARTIAL CABINET RESHUFFLE
Egypt’s cabinet witnessed a partial reshuffle where 10 ministers were replaced
and new members sworn in on Wednesday, 23rd March 2016. The new ministers’
list included:
Ministry Of Justice, Judge Hossam Abdel Reheem replacing Ahmed Al-Zend
Ministry Of Investment, Dalia Khorshed replacing Ashraf Salman
Ministry Of Finance, Amr Al-Garhy replacing Hany Qadry Dimian
Ministry Of Manpower, Mohammed Saafan replacing Gamal Sorour
Ministry Of Irrigation, Mohammed Abdel-Atty replacing Hossam Moghazi
Ministry Of Tourism, Mohamed Yehia Rashed replacing Hisham Zaazou
Ministry Of Antiquities, Khaled El-Anany replacing Mamdouh El-Damaty
Ministry Of Transportation, Galal El-Saeed replacing Saad El-Geyoushi
Ministry Of Civil Aviation, Sherif Fathy replacing Hossam Kamal
Ministry Of Business Sector, Ashraf Al-Sharqawy (the ministry was
reintroduced after 12 years).
Also three new deputies for the Minister of Finance were appointed including ( Mohamed Ahmed Moeit for treasury, Amr Ibrahim
Al-Moneir for taxation policies, and Ahmed Ashraf Kojak for finance policies) along with Nihal Magdy Al-Mogharbel as Deputy
Minister of Planning for Monitoring.
“The reshuffle represents an important milestone in the political and economic roadmap as it brings about the first
permanent cabinet after five years of consecutive reshuffles”
“In our view, this should expedite the reform pace and allow the new cabinet to focus on resolution of structural
challenges facing the economy rather than cosmetic changes with marginal impact on growth”
CI Capital Research Commentary
Egypt Daily
24th March 2016
The CBE decided to cut down the number of FOREX auctions held per week from three auctions(Sunday, Tuesday and Thursday)
with USD40 million per auction to one auction to be held regularly on Tuesday, with USD120 million. In the first auction under the
new system held last Tuesday, the CBE only sold USD104.5 million to banks at EGP8.78 per USD.
The Central Bank Of Egypt set a maximum term for Chief Executive Officers of banks in Egypt including both public and
private banks in Egypt at 9 years either consecutively or non-consecutively as part of its efforts to modernize and enrich the
banking sector by injecting new blood in banks management.
Moody’s Investor Services stated that the recent decision by the CBE to adopt
a more flexible exchange rate policy is credit positive for Egypt’s economy as the
official rate became closer to the parallel market’s price and is expected to help
boost exports and foreign investment inflows. Fitch Rating Agency also declared
that these measures are credit positive for banks, however Egypt still faces slower
growth, high inflation figures and increasing financing needs.
“While we view these monetary policy developments as credit positive, there are fiscal implications as higher interest
rates raise the government’s cost of borrowing”
Fitch Rating Agency
Reuters
21st March 2016
“These positive results should outweigh the near-term negative effect from devaluation-induced inflation. At the same
time, devaluation will have a limited effect on the government’s debt stock or debt servicing costs owing to the low levels
of foreign-currency-denominated debt”
Moody’s Investor Services Statement
Ahram Online
18th March 2016
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Suez Canal revenues decreased in February 2016 for the third consecutive
month , recording USD401.4 million down by 2.5% compared to USD411.8 million
in January 2016 and by 6.4% compared to USD429 million in December 2015, in
line with recent claims that a number of vessels have changed their route to the
Cape of Good Hope around South Africa due to the drop in international oil prices.
“The Suez Canal is the main route for world trade, and no other
alternative can take its place in the field of maritime transport”
Mohab Mamish
Chairman Of Suez Canal Authority
Ahram Online
22nd March 2016
The International Cooperation Minister, Sahar Nasr, signed an agreement with
the Saudi Fund For Development worth USD1.5 billion, during the fifth meeting
of the Egyptian Saudi Coordinating Council held in Riyadh on the 20th of March.
The finance will be directed to the Sinai Development Project including the
establishment of a number of projects in North and South Sinai governorates. The
Minister also signed another agreement with the Saudi Fund For Development,
Egyptian General Petroleum Corporation and Saudi Aramco to finance Egypt’s
requirements for petroleum products throughout the coming five years.
“The Sinai Development project is in accordance with the directives of President Abdel Fattah Al-Sisi and will be
implemented by the armed forces”
Ministry Of International Cooperation Statement
Al Borsa News
20th March 2016
At least 15 policemen were killed on Saturday,19th of March 2016 in an armed
attack when a mortar shell blasted a police checkpoint in the North Sinai city of Al
Arish. The North Sinai-based militant group Ansar Bait Al-Maqdis, which joined the
Islamic State group, claimed responsibility for the attack.
“The Interior Ministry will start carrying out several operations to
increase security presence in North Sinai and provide the necessary
logistic requirements to all checkpoints with full cooperation from the
Egyptian armed forces”
Magdy Abdel Ghaffar
Interior Minister
Daily News Egypt
21st March 2016
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EGYPT AT GLANCE
EXCHANGE RATES
12.49
13
12
11
24th March 2016
W/W
M/M
Y/Y
YTD
USD
8.85
0.0%
13.5%
16.4%
13.5%
EURO
9.89
-0.5%
-1.1%
-9.3%
19.0%
9.9%
16.5%
Sterling Pound 12.49
45.5%
8.2%
9.89
10
8.85
9
8
7
6
5
Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16
* Average Buy & Sell Prices For ALEXBANK
EGP per USD
EGP per Euro
EGP per Pound Sterling
10000
STOCK MARKET
9000
24th March 2016
EGX 30
7,545.73
W/W
0.8%
M/M
Y/Y
YTD
24.6% -19.4%
6.4%
EGX
8000
7,545.73
7000
6485
6000
5794.39
5000
4000
Mar-15
Apr-15
May-15
Jun-15
EGX 30
TB’S AUCTION
Jul-15
Aug-15
Sep-15
EGX 70 (Rel.)
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
EGX 100 (Rel.)
INTEREST RATES
Current* Previous**
Auction Date
Maturity
Average Yield %
20 March 2016
91 Days
13.061
Overnight Deposit Rate
24 March 2016
182 Days
13.750
20 March 2016
273 Days
24 March 2016
357 Days
Overnight Lending Rate
10.75%
11.75%
9.25%
10.25%
+150 bp
+150 bp
13.987
Corridor Rate
11.25%
9.75%
+150 bp
14.321
* at March 2016
** at December 2015
FX-AUCTION RATES
Auction Date
US $
22nd March 2016 17th March 2016
8.7800
8.7800
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