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Mina Rafiq, head of research at brokerage Al-Marwa Securities, said Hassan Abdullah’s appointment as acting governor of the central bank last year came at a time when the world was witnessing several crises, most notably the Russian-Ukrainian war, which negatively affected both the Egyptian pound and the currencies of many other countries.

He referred to the depreciation of the Egyptian pound against the dollar twice earlier, and with the revision of the program of the International Monetary Fund, the fund saw a new devaluation of the local currency, and these issues were influenced by external factors.

Rafik said the increase in the Egyptian pound interest rate did not come at high rates, as real interest rates remain negative in light of a 41% increase in core inflation last July, and the highest interest rates on savings certificates at the bank reach 22%, and this is in contrast to the interest in US banks, which is positive.

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He pointed to the issuance of dollar certificates to provide hard currency with higher yields than US banks, which improves foreign exchange flows in the coming period, and the improvement in the balance of payments began during the first 9 months of the fiscal year ending last year. June.

“The most visible element of the weakness in the balance of payments has been the decline in remittances from Egyptians abroad, and I believe that the increase in dollar interest rates will increase remittances from Egyptians abroad,” he added.

Rafiq said there could be big challenges in the coming period and the Egyptian Central Bank Governor needs to complete the path he has started so that the stability of the foreign exchange market can be achieved through some positive factors, including the government’s plan to develop dollar revenues through the proposal of state-owned companies on the stock exchange.

Rafik expected Egyptian banks to offer higher interest rate savings containers in the event of another devaluation of the Egyptian pound, but said the interest rate was still not attractive due to high inflation rates.

He added: “Even if the certificates are offered at 25% per annum, they will not be attractive to investors who have turned to the money and gold markets to keep their savings.”

Rafik said the 2023 H1 business results season showed that most companies posted good business results and very strong profits, with the first quarter in particular higher than the second quarter hiding the local currency. Because companies benefit from the revaluation of their assets and exporting companies benefit from exchange rate differences, banks also benefit from the valuation of their assets in foreign currency, and large sectors of the stock exchange benefit from the devaluation of the local currency, which encourages investors to go into financial markets, as it is better than the profitability in banks.