Metropolitan Egypt expects that the Central Bank of Egypt (CBE) will fix interest rates in the next Monetary Policy Committee meeting on Thursday 28 September, according to Metropolitan Egypt CEO Khaled Nagaty.
Nagaty also expects that the value of the interest rate will remain the same until the end of the year.
Regarding the depreciation of the dollar against the Egyptian pound, Nagaty doesn’t expect a decrease in the dollar’s value to reach EGP 14 by 2018; however, he forecasted that 2018 will see a slight decline in the dollar’s value, but it will continue in 2018, because the decline in the value of the dollar depends on an increased supply of it in the market, which will only come with the return of tourism and increased exports.
Nagaty pointed out that the CBE stands in awe between lowering the interest rate or fixing it. Raising the interest rate reduces the money liquidity with persons and encourages saving, which helps to reduce inflation to a certain extent, but in turn affects the ability of investment in Egypt because the interest rate is high for the investor to borrow from banks because the project does not receive a percentage of profits sufficient to manage and repay the loan.
Therefore, the investor decides to terminate the project and invest his money and capital with banks to achieve a high return without the risk of loss, and this actually works to increase the unemployment rate and decline investment capital, according to Nagaty.
He called on the CBE to determine its priorities, noting that “in the current period, should the interest rate be raised or lowered, these priorities may vary each period according to market variables, and the CBE should review its priorities every six months to fit with the current period.”
“One of the most important criteria of the strength of the Egyptian economy is not only how much the foreign reserves are, but the source of this reserve must be the source of the rise of foreign reserves are the sources of state income, such as tourism and exports, not how money enters the state because of the rise in return only,” added Nagaty.
Metropolitan Egypt (S.A.E.) was originally established in 2000 in USA as a credit consultancy firm, and in 2007 it launched its office in Egypt and grew to be a leading consultancy firm specialised in credit and financial consulting for both debt and equity markets to serve the local market and the MENA region.