The Egyptian pound is one of the world’s top-three currency performers in 2020/Bloombergby Bloomberg
Egypt held interest rates for the second straight month as the virus outbreak in China stoked concerns over global economic growth and inflation quickened more than expected.
The Central Bank of Egypt (CBE) said, “Disruptions to global economic activity following the recent coronavirus outbreak could weigh on the global economic outlook, at least in the near term.”
The decision came as Egyptian policy makers balance calls for more economic stimulus to boost business with the need to maintain the kind of sky-high rates that have made the North African nation’s debt an emerging market darling.
As Egypt pursues an economic overhaul that began in late 2016 with a dramatic currency devaluation to secure a $12 billion International Monetary Fund loan, it’s looking to spur enterprise and long-term investment. Non-oil private sector growth slowed last month to its lowest level in almost three years.
Inflation accelerated for a third consecutive month in January to an annual 7.2 per cent, with the MPC stating that keeping rates unchanged was consistent with its goal of inflation at nine per cent, plus or minus 3 percentage points, in the fourth quarter “and supporting the disinflation path over the medium-term.”
Overseas money has continued to pour into local debt in recent weeks, as Egypt’s real rate remains among the highest globally despite 450 basis points of cumulative rate cuts in 2019. The pound is one of the world’s top-three currency performers in 2020.