Egypt Central Bank Reluctant to Hike Interest Rates

Despite pressure from investors, Egypt’s central bank is hesitant to raise interest rates, reported Bloomberg. Although the Egyptian pound was devalued five months ago, investors still believe that the currency needs another devaluation to reflect its true value. Speculations about the weakening of the pound had already been circulating when Egypt requested another loan from the International Monetary Fund in March.

“The recent communication from the IMF hinted at a clear unhappiness with the lack of FX flexibility ahead of any potential new loan program,” stated Paul Greer, a London-based money manager at Fidelity International. “To that end, we are expecting the Egyptians to continue to weaken their currency,” he added. The central bank’s monetary policy meeting is scheduled for today (Aug. 18), and after its decision to keep rates unchanged in June, investors have no idea what to expect.