Beltone Financial confirmed that the rise in the interest rate on government debt instruments to 18.9% maintained the attractiveness of investment in the Egyptian market, noting that the stabilisation of interest rates by the Central Bank of Egypt (CBE) on Thursday will provide the necessary support for keeping the rates high.
“We confirm our projection of a rise in treasury bill yields above 16.5%, as local banks and companies secure the necessary liquidity necessary to balance the calm pace of foreign investment,” Beltone said.
It pointed out that the third quarter of the fiscal year (FY) 2017/2018 saw investment net inflows of $7bn, up from $500m in Q3 of FY 2016/2017, which supports their vision of a strong opportunity to invest in fixed income instruments in Egypt.
The CBE’s monetary policy committee decided on Thursday to keep the overnight deposit and lending and the price of the main operation unchanged at 16.75%, 17.75%, and 17.25%, respectively, while also keeping the credit and discount price unchanged at 17.25%.
According to Beltone, the decision came in line with its expectations to take into account the expected inflationary pressures, resulting from the recent increase in the prices of water, electricity, and fuel.
Beltone expected annual inflation to rise between 3-5% in Q3 2018, noting that given the low inflation increase in May at 11.4%, the inflation will remain within the target of 13% (+/- 3%).