Egypt's international bonds rise after CBE raises interest rates

(MENAFN) Egypt's international bonds experienced a significant boost, extending over a period of more than two years, subsequent to the announcement made by the Central Bank on Wednesday regarding a substantial increase of 600 basis points in interest rates. This move coincided with a notable decline in the value of the Egyptian currency, marking the onset of an anticipated devaluation process.

According to data from Tradeweb, the most significant gains were observed in longer-term bonds, particularly those maturing in 2047, which surged by 2.6 cents to reach 82.3 cents. The market reaction reflects investor confidence in the measures taken by the Central Bank amidst economic challenges.

The decision to raise interest rates by 600 basis points, equating to 6 percent, represents a bold move by the Central Bank of Egypt, with rates reaching the level of 27.25 percent. The Monetary Committee clarified that this decision was motivated by the objective of tightening monetary conditions to align with the targeted trajectory for reducing inflation rates.

In its statement, the committee outlined that maintaining these elevated interest rate levels is imperative until the inflation rate converges to the desired path. This proactive approach underscores the Central Bank's commitment to addressing inflationary pressures and stabilizing the Egyptian economy in the face of ongoing economic uncertainties.

The surge in international bond prices and the subsequent decline in the value of the Egyptian currency highlight the market's response to the Central Bank's decisive action. It signals a potential shift in investor sentiment towards Egypt's economic outlook, with the hope that these measures will pave the way for sustainable economic growth and stability in the long run.

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