2% increase in the Interest Rates! Cairo is on fire!

In the middle of the highest inflation rates happened recently in Cairo, Egypt for the main cities, the MPC (Monetary Policy Committee) of the CBE (Central Bank of Egypt) had decided on last Thursday to increase the interest rates on Deposits by 2%, that's to curb the lunatic wave of inflation and to attract back the "Hot Money" after it buzzed-off leaving a US$ 20 Bn. gap behind.

More and more about the inflation, wheat crises, economic trends and KPI's coming to you from Cairo Egypt.

• The Inflation rates had been surging recently to reach the highest peak in years in last April 2022. The inflation marked 14.9% nation-wide on annual basis, while marked 13.1% for Urban communities on annual basis too, (Bloomberg).
• Whereas, on monthly basis, it marked 3.7% for nation-wide and 3.3% for urban communities, this level was not attainable since January 2017.
• April, 2022 had encountered the full effect of the new FX rate announced by the CBE on March 24th, the move that hit the EGP by negative (15%) approximately against the US$.
• The MPC of the CBE had decided on last Thursday to increase the interest rates on Deposits by 2% to reach 11.25%, that's to curb the lunatic wave of inflation and to attract back the "Hot Money" after it buzzed-off leaving a US$ 20 Bn. gap behind.
• The 18% COD (Certificate of Deposits) issued by the financial arms of the government "National Bank of Egypt" and "Banque Misr" still collecting the liquidity from the market gaining EGP 0.75 Trillion, in favor of NBE for having 66% approximately of these CODs, this may trigger a mark, where NBE will cease the COD shortly before Banque Misr.

According to Bloomberg and subsequent to the Ukrainian crisis, the EGP was the most devalued currency against the US$ among the "Emerging Markets", other positions for other currencies ranged between negative (10%) for the Turkish Lira down to the Hungarian currency which marked negative (7%), Bloomberg.

Despite of the war and the direct effect on the Western sanctions on Russia, the Ruble had re-gained all losses encountered since the war begun. The trough against the US$ was at 140 Ruble/US$, which recently bounced back to ONLY 62 Ruble/US$, due to the fact that, western attempts to cut the Russian gas to Europe were failed especially, after the US pressures on KSA to fill the Russian's gap were all failed too. In a recent parallel talks with Qatar, led by Germany, it was announced by the Qatari leader after the closed conference, that "Qatar can help in stabilizing the energy markets in Europe".

The hanger specter is looming unfortunately, as Russia and Ukraine are the food basket for many spots of the world especially, the Middle East.

The Wheat is bread for Egyptians,.....!!

• Wheat prices surged extravagantly since the Ukrainian war coupled with changing atmosphere as well, to reach US$ 443.75 per ton, the diagram uses the Bushel scale, which is amounting to 27.216 Kg. The surged prices aren't expected to plummet especially, no hope for ceasing the war looms until now (Chicago Wheat Exchange and Bloomberg).
• Egypt, which imports 43% of its wheat imports from both countries in war, is considering to diversify the sources to keep the channel stuffed. The Indian wheat is the closer alternative.

Additionally, Egypt is planning in a very ambitious plan to self sustain its inventories of wheat,(65% in 2025, instead of the current level at 45% in 2020), throughout cultivating new areas for wheat that reached 9.7 Millions of Feddans in 2021 (4200m is the feddan) sloped upwards from 3.6 Million Feddan in 2014.

The project is very strategic geopolitically and to Egypt to cover the most needy crop for the 104 Million capita nation, the biggest in the Arab world and the Middle East.

To be continued,.....

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