Banking & Finance Egyptian banks follow currency devaluation with high-yield CDs By Reuters October 28, 2022 REUTERS/Mohamed Abd El Ghany Egypt has been suffering a severe shortage of foreign currency despite a 14.5 percent devaluation on October 27 Egypt’s three biggest state banks on Thursday offered three-year certificates of deposit with a 17.25 percent annual yield, a move designed to absorb liquidity and contain inflation after a devaluation of the currency. The move by National Bank of Egypt (NBE), Banque Misr (BM) and Banque du Caire followed a 200 basis points rate hike by Egypt’s central bank early Thursday. The Egyptian pound slid about 14.5 percent to a record low against the dollar after the central bank said it had moved to a “durably flexible exchange rate regime.” The hike comes in line with the announcement today of a $3 billion funding deal between Egypt and the International Monetary Fund (IMF) that will run over 46 months. In March, when the currency also lost about 14 percent of its value against the dollar, NBE and BM, the two biggest state banks, offered 18 percent certificates but for just one year, raising about EGP750 billion ($32.47 billion). “The central bank has fully floated the currency in a move to crack down on the parallel market where the dollar had already traded for more than 23 pounds, and it’s expected to continue increasing to about 25 pounds per dollar, so the banks’ move is a push towards containing inflation,” said Samir Raouf, a researcher at National Planning Institute. “Their longer period stems from IMF and World Bank expectations about the continuity of economic headwinds till 2026,” he added.