Egypt’s NBE, Banque Misr issue new 25% yield certificates, highest ever on record

The National Bank of Egypt (NBE) and Banque Misr have issued new one-year maturity saving certificates with a 25 percent yield after one year, the highest yield on record, the two banks announced on Wednesday.

The new certificates are also available at a 22.5 percent yield for monthly disbursement.

The move comes as the local market anticipates a devaluation of the Egyptian pound for the third time in recent months, following the approval of a new $3 billion loan programme from the International Monetary Fund (IMF), which took place in December.

The bank certificates aim to contain the rising inflation by encouraging savings.

Since March, when the war in Ukraine started, Egypt has depreciated the Egyptian pound twice and hiked the interest rates by a total of 8 percent (800 bps), a record level in the country’s monetary policy history.

The actions the CBE has taken over the past 10 months come against the backdrop of an exit of around $25 billion in indirect investments from local debt instruments, rising inflation, and a shortage in US dollars in the domestic market.

Egypt’s inflation has been accelerating rapidly since March, reaching over 21 percent by the end of November – the highest rate in almost five years.

Under the 46-month IMF deal, Egypt is required to adopt a free exchange rate regime with a flexible monetary policy, which indicates that the CBE could introduce further hikes to the key interest rates in 2023 and depreciate the Egyptian pound more.

The upcoming meeting of the CBE’s Monetary Policy Committee, at which it will review the key interest rates, is scheduled on 2 February.