The interest rates of US dollar savings certificates, issued by the banks operating in the Egyptian market, have remained relatively stable despite the US Federal Reserve’s decision to increase dollar interest rates Wednesday.
Meanwhile, the interest rates on dollar deposits in some banks increased at a rate ranging between 0.125% and 0.25%.
According to the Director General of the Treasury and Capital Markets at the Industrial Development and Workers Bank of Egypt Haitham Abdel Fattah, the interest rates of dollar saving schemes at the banks operating in the Egyptian market had varied responses to the Federal Reserve’s decision to increase the dollar’s interest rates by a quarter of a percentage point.
Abdel Fattah explained the interest rate of the dollar savings certificates did not increase because they were already high prior to the Federal Reserve’s decision, whereby their interest rates range between 3.75% and 4% in a number of banks.
He said the rate of the deposits with maturity dates ranging between one week and one year responded by increasing the dollar’s interest rate. This rate increased in the majority of the banks by between 0.125% and 0.25% because it automatically reflects any increase or decrease in the dollar’s interest rates in global markets.
According to Assistant General Manager of the Treasury at Société Arabe Internationale de Banque (SAIB) Osama Al-Manyalawy, the interest rates of the dollar saving schemes at the banks operating in the Egyptian markets are expected to witness a real increase in 2016.
Al-Manyalawy explained there are strong indicators regarding the possibility of increasing the dollar’s interest rate several more times by the US Federal Reserve throughout the year. Consequently, the dollar’s interest rate in the Egyptian market will be affected.
“The interest rates of the dollar savings certificates were already high, amounting to about 4.5% in some banks. Moreover, some banks grant high interest rates on some deposits’ maturity periods. Consequently, the banks did not quickly increase the interest rates of their dollar savings schemes after the US Federal Reserve raised the dollar’s interest rate,” he said
The Federal Open Market Committee of the US Federal Reserve decided Wednesday to increase the interest rate on the dollar by a quarter of a percentage point, the first move of its kind in about ten years.
The dollar’s interest rate increased in global markets after this decision by between half and quarter of a percentage point, after it stood between zero and quarter of a percentage point for about eight years.