Egyptian Pound in limbo : A worrying start for a new year

God knows this is not how I wanted to start the new year. I was on merrier post to remember last year before going into the worrying stuff it did not take 7 days into the year 2023 and the economic worries returned back in force.

On Wednesday, the Egyptian pound had lost over 10% of its value against the US dollar two or even one hour after Egypt’s biggest public sector banks announced their new 25% saving certificates.

A photo of Banque Misr in Downtown Cairo 

Egypt’s National Bank of Egypt “NBE” and Banque Misr “BM” which are both state-owned announced issuing new one-year maturity saving certificates with a 25% yield after one year.

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

This is the highest yield an Egyptian bank has ever presented.

In fact, this is even higher than what the 1980s Pyramid scheme companies like El-Rayyan presented as far as I remember. I do not know from where they can get this return honestly speaking. 

The two public banks announced it Wednesday and hell broke loose.

The NBE mobile phone application which you can request that certificate has been crashing throughout the day.

Then the Egyptian pound began its free fall against the US dollar throughout the day in banks all over the country.

I did not dare to check its price on the black market nor the price of the gold in Egyptian pounds.

That free fall of Wednesday is actually happening before we would have the third devaluation of the Egyptian pound for the third time in recent times to meet the demands of the International Monetary Fund “IMF” after approving USD 3 billion loan programme.

Ironically the release of those certificates I believe that it was intended to encourage the public not to put their money in US dollars or gold.

Theoretically, it should increase demand for Egyptian pounds. Of course, we are still speaking about the first 24 hours.

That move was intended to make the public put their money in the banks or rather the public banks to contain the rising inflation.

Yet, in the first 24 hours and that free fall of the Egyptian pound, the result is not encouraging.

Needless those high-yield certificates are extremely bad news to business and industry in general in Egypt. It is another hit to a struggling market that suffered a lot last year.

The free fall of the Egyptian pound against the US dollar on Wednesday covered overshadowed the news of the certificates with fears and worry about what is going to happen in the upcoming weeks.

Already the next meeting of the Monetary Policies Committee in the Central Bank of Egypt “CBE” will be on 2 February.

By the way, Thursday we may have a meeting for Egypt’s Fuel Automatic Pricing Committee and it is expected that it may increase fuel prices.

I hope that this meeting is adjourned for everyone’s sake.

FYI, on 26 December 2022 the CEO of NBE Hisham Okasha said that both his bank and BM had no intention at the current time to issue high-yield saving certificates like the 20% saving certificates.

Most people expected high-yield new saving certificates “Only 20%” would be issued by late December or early January yet Okasha went on MBC Misr to deny this. Just from a week ago !!!

Now 2023 will be very critical economically by all measures in Egypt and it will impact life whether socially or politically. 

May Allah have mercy on us.