Will public banks in Egypt offer high-yield savings certificates soon?

The statement of the Egyptian Prime Minister, Mostafa Madbouly, about the imminent end of the foreign currency crisis in Egypt, renewed the speculation of experts and analysts regarding the Central Bank of Egypt undertaking a new liberalization of the exchange rate, followed by a package of measures, including raising the interest on bank certificates in public banks to record levels that may Its percentage exceeds 30%.

Record levels

Banking sources said that offering savings certificates in conjunction with the decision to liberalize the exchange rate is a logical and proposed scenario, but this time it is likely that interest on the certificates will rise to record levels to achieve positive interest in light of record inflation rates.

The sources confirmed that the interest rate ultimately depends on the levels of foreign liquidity available in banks and the local liquidity rates that are intended to be attracted from the market at the time of liberalization of the exchange rate.

Savings certificates with a return of 30%

Hani Genena, economic expert, chief economist and investment strategist at Cairo Capital Securities Trading Company, believes that raising interest rates significantly is the only measure that achieves a real positive benefit for clients in light of inflation rates rising to record levels.

Issuing savings certificates

He pointed out that raising the interest rate or issuing savings certificates with a return of 30% or more is a very appropriate level to stop borrowing and limit the levels of liquidity in the market, which causes an increase in purchasing power and aggravation of inflation levels.

Genena stressed the importance of raising the interest rate by no less than 5 to 7% in order to ease the pressure on the pound, suggesting that the interest rate would be raised by about 3% before the end of the year.

Mona Badir, a macroeconomic analyst at a commercial bank, believes that offering high-yield certificates will have a limited and temporary impact on inflation rates as long as foreign currency inflows do not witness any increase.

While Banking expert Sahar El-Damaty believes that liberalizing the exchange rate and issuing certificates with high interest initially requires the availability of foreign liquidity, which creates saturation of market requirements and eliminates parallel market trading. Hence, restoring or attracting dealing in the Egyptian pound is easier, whether through savings certificates. High returns or other attractive products to customers.

Banking sector banks

Egyptian banking sector banks are seeking to support foreign currency levels within the official sector by offering savings products in dollars, as the National Bank of Egypt and Egypt last July issued two new savings certificates in US dollars for a period of 3 years, amid the dollar scarcity crisis.

The two banks also made loans available to Egyptians abroad in exchange for transferring installments in foreign currencies in an attempt to restore foreign remittances from abroad.