USD 1 bn in foreign inflows in two days following interest rate hike: Nearly USD 1 bn in “foreign investment” (read this as “the carry trade,” we’d say) flowed into Egypt within two days of the central bank’s Monetary Policy Committee hiking interest rates by 200 bps, CBE Governor Tarek Amer said on Sunday. Defending last week’s surprise decision, Amer said the level of investment inflows that followed the hike “has not happened in the history of Egypt” and “reflected the success and soundness of the monetary policy,” according to statements made to MENA news agency picked up by Reuters.

Last week’s decision to raise interest rates was widely criticized by many in the Egyptian business community, who believe that the move will stifle domestic investment and do little to curb inflation in a nation that remains largely unbanked. Amer, meanwhile, has countered that the CBE hiked rates independent of any pressure from the IMF, noting that while higher interest rates eat into corporate profits, inflation eats at invested capital.

Foreign investment in Egyptian treasuries have apparently reached USD 7 bn since the EGP float in November, Al Borsa reports, citing a source from the CBE.

Amer also announced that the banking sector had collectively drawn in USD 25 bn since the EGP float last November. He also repeated promises that Egypt will make good on USD 750 mn in arrears owed to international oil companies in June, Al Shorouk reports.