Egypt, S.Arabia step up trade ties through coordination council talks    Egypt reviews progress on $200m World Bank-funded waste management hub    Egypt urges Israel to accept Gaza deal amid intensifying fighting    SCZONE showcases investment opportunities to eight Japanese companies    Egypt, ADIB explore strategic partnership in digital healthcare, investment    SCZONE, Tokyo Metropolitan Government sign MoU on green hydrogen cooperation    Egypt welcomes international efforts for peace in Ukraine    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt's FM, Palestinian PM visit Rafah crossing to review Gaza aid    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Egypt central bank plans weekly repos to curb rates
Published in Daily News Egypt on 12 - 03 - 2011

CAIRO: The Central Bank of Egypt said on Thursday it would launch weekly repurchase agreements in the money market to keep short-term interest rates under control after the political and economic turmoil of the past six weeks.
From March 22, the central bank will offer seven-day repo agreements each Tuesday at an interest rate of 9.25 percent. Repos are a way for central banks to lend funds into the market in exchange for temporary custody of securities.
"Market liquidity conditions have come under pressure, while the balance of risks surrounding the inflation and GDP outlooks has changed," the central bank said.
"In order to ensure that the prevailing short-term market rates are consistent with the MPC's (Monetary Policy Committee) policy rate...the CBE has decided to introduce repos."
The central did not elaborate on what securities it would accept in its repo operations, but a commercial banker familiar with the new system said Treasury bills would be used as collateral, and that the system would ease shortages of funds at some banks which threatened to boost market rates.
"Some banks have good liquidity and others are low," the banker said.
By permitting the use of Treasury bills in the operations, the system could also improve demand for the bills. Yields on them have been under upward pressure because of the political and economic instability.
The central bank has overnight corridor rates for deposits and lending, and it said after a meeting of the MPC on Thursday that it had decided to keep the rates steady at 8.25 percent for deposits and 9.75 percent for lending. It has left those overnight policy rates unchanged since September 2009.
Egypt's political landscape has undergone a transformation since the MPC last met on Jan. 27, and this will continue to affect consumption and investment decisions, the central bank said.
The economy nearly ground to a halt during weeks of protests that toppled the government of Hosni Mubarak, and some of its main sources of foreign exchange, including tourism and foreign investment, have collapsed. Many factories continue to operate below capacity, and the stock exchange has yet to reopen after having been closed for six weeks.
All eight economists polled by Reuters this week had forecast that the MPC would leave policy rates unchanged. It is striking a difficult balance; an interest rate hike could slow growth in the struggling economy but a rate cut would risk boosting inflation, and rising food prices were a major factor behind the political unrest.
Urban inflation slowed in February to a year-on-year 10.7 percent from 10.8 percent in January, while core inflation, which strips out subsidized goods and volatile items including fruit and vegetables, eased to 9.51 percent from 9.74 percent.
Although urban inflation fell from a peak of 23.6 percent in August 2008, it reignited last year, climbing as high as 13.6 percent in January 2010.
Egypt's Finance Minister Samir Radwan said on Thursday that economic growth might be as slow as 3 percent in the year to the end of June if production did not get back on track.


Clic here to read the story from its source.