{"id":584514,"date":"2023-04-02T00:00:00","date_gmt":"2023-04-02T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/02\/this-morning-cbe-makes-first-rate-hike-of-2023-but-no-further-egp-deval-yet\/"},"modified":"2023-04-02T00:00:00","modified_gmt":"2023-04-02T00:00:00","slug":"this-morning-cbe-makes-first-rate-hike-of-2023-but-no-further-egp-deval-yet","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/02\/this-morning-cbe-makes-first-rate-hike-of-2023-but-no-further-egp-deval-yet\/","title":{"rendered":"THIS MORNING: CBE makes first rate hike of 2023 \u2014 but no further EGP deval yet"},"content":{"rendered":"

Good morning, folks, and welcome to a new week, in a new month, in a new <\/span>quarter. <\/span>We\u2019re ringing in 2Q with another busy newsday, reinforcing our suspicion that the traditional Ramadan news slowdown just isn\u2019t going to happen this year. The headline story: the central bank\u2019s move on Thursday to hike interest rates by 200 basis points in a bid to curb inflation.<\/span><\/p>\n

THE BIG STORY THIS MORNING-<\/span><\/p>\n

Last Thursday saw the Central Bank of Egypt go through with its first interest rate hike of <\/span>2023. <\/span>The central bank met most analysts\u2019 expectations with a sizable rate hike of 200 basis points (bps), its first change to interest rates following a combined 800 bps of hikes in 2022. <\/span>Three of the se<\/span>ven analysts <\/span>we polled<\/a><\/span> last week were bang on the money \u2014 and six of seven expected rates to rise. <\/span><\/p>\n

But no further deval (yet):<\/span> The devaluation of the EGP against the USD that some had been <\/span>predicting to come alongside the rate hike simply \u2026 never materialized. The EGP is still changing hands at around 30.96 to the USD according to the official central bank rate. The currency has been holding steady at that rate for the past <\/span>three we<\/span>eks, <\/span>but 12-month non-deliverable forwards are pointing to about EGP 40.00 to the greenback, while the (anemic) parallel market sees the USD changing hands for EGP 35-36.<\/span><\/p>\n

<\/span><\/a><\/span>And no new high-interest certificates coming -NBE:<\/span> The National Bank of Egypt <\/span>(NBE) is not <\/span>launching new high-interest certificates of deposit following the MPC\u2019s decision, Vice Chairman Yehia Aboul Fotouh <\/span>said<\/a><\/span> Thursday. This came in response to rumors circulating online that the state-owned bank would begin offering new certificates at a 25-30% rate. NBE and Banque Misr both <\/span>offered record-high 25% yields<\/a><\/span> on one-year CDs for a period of time in January, coinciding with the devaluation of the EGP, which fell 20% during the first two weeks of the year.<\/span><\/p>\n

We have chapter and verse on the CBE\u2019s rate hike in this morning\u2019s news well, <\/span>below. <\/span><\/p>\n

IN EFFECT-<\/span><\/p>\n

#1- A <\/span>package of wage and pension hikes<\/a><\/span> is now in effect<\/span> after President Abdel <\/span>Fattah El Si<\/span>si signed the bill into law on <\/span>Wednesday<\/span>, according to <\/span>t<\/span>he<\/span>Official Gazette<\/span>. The <\/span>EGP 165 bn package<\/a><\/span> includes EGP <\/span>10<\/span> bn to raise public-sector wages and pension payouts, and EGP 85 bn to cover debt service for the final quarter of the current fiscal year. <\/span><\/p>\n

#2- A bill allowing informal industrial projects to obtain temporary licenses of up to three <\/span>years was also ratified<\/span> by the Sisi <\/span>administration <\/span>on <\/span>Thursday<\/span>. The law gives the Industrial Development Authority (IDA) the power to provide informal industrial establishments with one-year licenses to operate while owners legalize their businesses. The Trade Ministry will be able to extend these licenses by up to two more years on the IDA\u2019s recommendation. Both laws were <\/span>greenlit by the House<\/a><\/span> last month.<\/span><\/p>\n

#3- Higher Suez Canal transit fees for oil tankers: <\/span>As of yesterday, the Suez Canal <\/span>Authority <\/span>has raised fees<\/a><\/span> for oil ships transiting the waterway. Tankers carrying crude oil and petroleum products now have to pay a 25% surcharge while their empty counterparts are paying an extra 15%, up from an additional 5% for both laden and ballast vessels. <\/span><\/p>\n

HAPPENING TODAY-<\/span><\/p>\n

Welcome to a brand new month \u2014 and a brand new quarter.<\/span> Here\u2019s what to look out for over <\/span>the next week or two:<\/span><\/p>\n