A rising interest rate at the Central Bank of Egypt (CBE) by 1.5% continues to influence the return on debt instruments offered by the government. The return on treasury bonds offered by the Ministry of Finance jumped by rates of 1.565% to1.912% on Monday, and the return on treasury bills rose by 1.1% to1.76% on Sunday.
Ministry of Finance offered three auctions for treasury bonds on Monday. The first is with maturity period of a year and a half, and an average return of 14.631%, compared to 12.719% before raising the interest rate, an increase of 1.912%.
The average return on treasury bonds with a three-year maturity period increased by approximately 1.71%, registering 15.115%, compared to 13.4%. The return on seven-year treasury bonds also increased by 1.841%, registering 16.921%, compared to 15.08%.
In line with CBE’s decision to raise its basic interest rates by 1.5% last Thursday, the National Bank of Egypt, Banque Misr, and Banque du Caire decided to raise their interest rates on deposits and saving accounts in Egyptian pounds by 1% to 1.25%. The new rates were applied starting from Monday.
According to Director General of the Treasury at the Industrial Development and Workers Bank of Egypt (IDBE), Haitham Abdel Fattah, the bank will make its final decision on the return rates of its saving schemes in pounds on Tuesday.
Head of the treasury at a foreign bank operating in the Egyptian market, Tamer Youssef, said all banks operating in the Egyptian market are expected to raise their interest rates on savings schemes in pounds.
He added that the timing of the move and how much interest rates will increase depends on the circumstances and policies of each bank. However, it is an inevitable step, especially after the large increase occurring in returns on bills and bonds.
Blom Bank Egypt decided to raise the return on its three-year saving certificate by about 2.25%, making it 12.5% annually.