Download DEPRECIATION EGYPTIAN POUND

THE WEEKLY
Thursday
17th March 2016
Issue # 12
EGYPTIAN POUND
DEPRECIATION
On the 14th of March, the Central Bank of Egypt (CBE) held an
exceptional FX auction through which it sold USD198 million to banks
at a rate of EGP8.85 per USD ,compared to EGP7.73 per USD in
previous auctions, which represented a depreciation by 14.5% of the
local currency, in a first move in this direction in 2016.
At this new rate, banks operating in Egypt are allowed to sell the
US Dollar at EGP8.95, a rate that is closer to average selling prices in
the parallel market, which are expected to decrease FX black market
dealings.
The CBE declared in a statement that it has devised a comprehensive plan towards achieving a more flexible FX policy that
corrects exchange rate distortions and better reflects the underlying forces of supply and demand, restoring foreign currencies
circulation to banks along with creating a conducive investment climate to unleash the potential of the Egyptian economy.
The CBE held another auction on Wednesday, 16th of March, where it sold USD1.5 billion to banks at a rate of EGP8.78 per USD
in order to cover around 25% of foreign currency import requests , which is a 0.8% appreciation compared to the EGP8.85 per USD
in Sunday’s auction.
“Under such a regime, the pound would be linked to a basket of currencies rather than being pegged to the dollar as it
has in recent years”
Mohamed Abu Basha
Economist EFG Hermes
Ahram Online
14th March 2016
IN THIS ISSUE...
Egypt Public Banks Launch A New Saving Certificate
Egypt Signs A New Loan With Kuwait Development Fund
The Government Lowers Gas Prices For Steel Producers
Inflation Slows In February 2016
Egypt Plans To Offer Incentives For Low-Cost Airlines
A WORLD OF REAL POSSIBILITIES
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“I expect imports cost to increase during the next period specially in the absence of sufficient international reserves at the CBE to meet
importers’ needs…the decision will create more inflationary pressures with a negative impacts on prices”
Mohammed Rostom
A Member Of The General Division Of Importers
Alborsa News
14th March 2016
Egypt’s leading state-owned banks, National Bank of Egypt (NBE), Banque Misr, and Banque Du Caire, launched a new three-year
EGP denominated Certificate of Deposit (CDs) for individuals through which they will trade in the USD at the current exchange rate
(EGP8.95) in return for local currency at a 15% annual interest rate. Moreover, NBE, Banque Misr and Banque de Caire announced
on Sunday the offering of Euro-denominated certificates to Egyptian expatriates at a 2% interest rate for one year certificates, 3%
for three years and 3.5% for five years.
Egypt signed a loan agreement with the Kuwait Fund For Economic and Social Development worth USD108 million to be repaid
over 25 years at an interest rate of 2.5% with a 5 year grace period, where the funds will be used to finance the development of
the South-Helwan power plant capacity.
The government lowered gas prices for steel manufacturers by 36% to reach
USD4.5 per million thermal units (mtu) from USD7 per mtu, in a move aiming at
ensuring the availability of locally produced steel for the upcoming infrastructure
projects and other local consumption needs leading to decreasing finished steel
imports and curbing importing bill .
“The decision is estimated to save the country USD1.1 billion in foreign
currency currently spent on importing billet (steel raw material) and
raise production capacity to increase exports by USD600 million”
Industry And Foreign Trade Ministry’s Statement
Ahram Online
10th March 2016
Egypt’s annual headline inflation recorded 9.13% in February 2016 down from 10.1% in January 2016, while the monthly
rate registered 0.97% in February up from 0.11% in the previous month. Annual core inflation recorded 7.5% in February 2016
compared to 7.73% in January, while the monthly rate registered 0.88% in February compared to 0.98% in January.
“The bulk of the monthly increase was explained mainly by the sporadic increase in the prices of food items and regulated
price adjustments, which was partly offset by the decline in clothing prices”
CBE Monthly Inflation Note
March 2016
Egypt is planning to offer incentives to low-cost airlines (easyjet, Air Berlin, and Condor) aiming at reviving the tourism sector, as
the government used to offer tour operators an incentive of USD30 per seat on any aircraft on which between 60 and 90 percent
of seats have been filled. The Tourism Minister, Hesham Zaazo stated that it is not yet decided whether the incentive will be in form
of a USD discount per seat or another alternative.
“I will announce that program very soon, maybe towards the end of the International Tourism Bourse, when I meet with
everybody and listen to everybody”
Hesham Zaazou
Tourism Minister
Egypt Independent
10th March 2016
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EGYPT AT GLANCE
EXCHANGE RATES
13
12
11
17th March 2016
W/W
M/M
Y/Y
YTD
10
8
USD
8.85
12.2%
13.5%
16.1%
13.5%
EURO
9.94
16.0%
13.9%
14.2%
23.2%
12.0%
17.0%
Sterling Pound 12.62
13.2%
9
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
9.3%
* Average Buy & Sell Prices For ALEXBANK
EGP per USD
STOCK MARKET
EGP per Euro
EGP per Pound Sterling
10000
9000
17 March 2016
EGX 30
7,485.69
W/W
M/M
Y/Y
YTD
14.0%
25.9%
-21.7%
5.6%
EGX
8000
th
7000
6000
5000
4000
Mar-15
Apr-15
May-15
Jun-15
Jul-15
EGX 30
TB’S AUCTION
Aug-15
Sep-15
EGX 70 (Rel.)
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
EGX 100 (Rel.)
INTEREST RATES
Auction Date
Maturity
13 March 2016
91 Days
11.591
10 March 2016
182 Days
13 March 2016
10 March 2016
Current* Previous**
Average Yield %
Overnight Deposit Rate
12.222
9.25%
Overnight Lending Rate 10.25%
8.75%
9.75%
+50 bp
+50 bp
273 Days
12.478
Corridor Rate
9.25%
+50 bp
357 Days
12.514
* at December 2015
9.75%
** at January 2015
FX-AUCTION RATES
Auction Date
US $
17th March 2016
8.7800
10th March 2016
7.7301
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Horus, Aswan
T : +2 02 2399 2000 E : [email protected]
Head of Research
Emil Eskander
[email protected]
Research Manager
Hemat El Masry
[email protected]
Senior Associate:
Sahar Ezz El Arab
[email protected]
Research:
Omar Ismaeil
[email protected]
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