Egypt Edition 
UAE Edition 
Saudi Edition 
MENA <> India Corridor 
Logistics (MENA) 
Climate (MENA) 
Share
Business leaders and pundits welcomed yesterday’s moves by the central bank and the announcement of a new IMF facility.
ON THE AIRWAVES-
“Today’s decisions put us back on the right track and bring back balance,” our friend Sherif El Kholy, partner and Middle East and Africa head at PE giant Actis, told Extra News (watch, runtime: 7:24). What’s more important than an attractive exchange rate is the availability of FX liquidity, he added, explaining that yesterday’s decisions “will bring back FX liquidity, which will curb inflationary pressures.”
The end of arbitrary pricing: “There had been a lot of inconsistencies in pricing in recent months, and there was plenty of exaggeration in the pricing of essential commodities in particular,” Al Gioshy Steel chairman Tariq Al Gioshy said (watch, runtime: 5:35). Prices are broadly expected to cool now that industries know how to approach their pricing based on the USD rate.
ON THE BANKING FRONT-
Some banks may have to increase their capital to meet the CBE’s capital requirements, EG Bank board member Mohamed Abdel Aal told Enterprise. “It’s hard to tell where the price of the EGP will stabilize, but with sufficient FX liquidity in local banks to meet demand, there won’t be a big impact on banks’ capital adequacy ratio,” he added. If that doesn’t happen, then some banks will probably have to increase their capital to meet requirements, Abdel Aal said.
More needs to be done: “Unifying the exchange rate and speeding up the implementation of the state privatization program will help attract FDI and improve rating agencies’ outlook for the Egyptian economy — but there’s more to be done to reap the benefits of these decisions,” Abdel Aal said.
The banking sector is sitting pretty: “The banking sector is among the biggest beneficiaries of the interest rate increase,” HC Securities said in a note seen by Enterprise. “The interest rate hike will increase the weighted average cost of capital for companies listed on the Egyptian stock exchange, reducing their valuations. However, the impact will vary from sector to sector,” the note said.
Don’t count out the EGX, though: While high-yield CDs will compete with equities for attention in the coming days, HC expects “the anticipated economic improvements will have a positive impact on stocks after the market absorbs” recent policy changes.
