Egypt’s Central Bank axes key interest rate by 100-bps as EGX30 soars

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Egypt’s Central Bank axes key interest rate by 100-bps as EGX30 soars

On Sunday, the 29th of September 2019, Egypt’s Central Bank had axed key interest rate by 100-basis point for two straight months in a row, while followed by reveal of the news, Egypt’s benchmark EGX30 share index had mounted as much as 3.8 per cent in the first hour of trading, buoyed up by an en masse entrance of buying position of the Local financial institutions likes of large lenders alongside hedge funds.

Nonetheless, as investors seemed to be rushing on to bank a profit by the end of the day, Egypt’s benchmark EGX30 had rounded off the day 3.30 per cent higher to 14,315.79 after spiking as much as 5 per cent during morning Middle East trading hours, remarking third straight session of gains in a row over optimism of another interest rate as beforementioned.

According to Egypt’s Central Bank’s Sunday’s (September 29th) statement, Egyptian Central Bank had axed its key interest rate by 100-basis point, while overnight borrowing costs were curbed to 14.25 per cent from an earlier 15.25 per cent and overnight deposit rates was deduced to 13.25 per cent from a prior 14.25 per cent.

On top of that, following release of an interest rate-cut on Sunday (September 28th), Egypt’s main bourse was forced to suspend trading of 70 shares for roughly 10 minutes after they had climbed more than 5 per cent during first hour of trading, while addressing to money market’s excessive reliance on Central Bank’s decisions, an analyst at Naeem Brokerage said on Sunday (September 29th), “The market responded to the rates cut and the passing of Friday safely ...

we returned to logic again,” while a head of research at Pharos Securities Brokerage, Radwa El-Swaify had been quoted saying that the Egyptian stocks had begun to gain some of their footings lost last week, as a much-required rate-cut had rekindled investors’ risk appetite for riskier assets.

In point of fact, Egypt's Central Bank slashed interest rate by 150-basis point last month, while rate cuts on two straight months in a row had ramped up Egyptian equity markets.