THIS EVENING: Interest rates and monetary policy decisions at home and abroad + Hisham Selim passes away at 64
Good afternoon, ladies and gentlemen, and welcome to the end of the week. Today is all about interest rates and monetary policy, both here at home and abroad. Several central banks enacted interest rate changes today, just hours before our own Central Bank of Egypt’s Monetary Policy Committee is set to review interest rates.
*** BUT FIRST- Tell us how your purchasing patterns have shifted over the past few months, amid import restrictions that have led many to report difficulties finding or keeping up with the costs of imported goods. Are you shifting more towards locally produced goods? What do you think of the pricing and quality of local alternatives? Take this quick survey and give us your thoughts — we’ll bring you the results in an upcoming Inside Industry story.
ALSO- IN MEMORIAM: Egyptian actor Hisham Selim has passed away at the age of 64, after a battle with cancer, Youm7 reported. Selim’s decades-spanning career began when he was a teenager. His first film appearance was in the iconic 70s films Embratoreyet Meem and Awdat Al Ibn Aldal. He played numerous, memorable roles in the 90s.
THE BIG STORY TODAY AT HOME AND ABROAD
It’s a big day for monetary policy both here in Egypt and on the global stage.
Some countries are sailing upwind with decisions to maintain or cut their benchmark rates, defying a global tightening wave: The Bank of Japan maintained (pdf) a negative interest rate (-0.1%) and vowed to continue to do so in order to boost economic growth. Following the decision, Japan intervened in the foreign exchange market, buying up JPY for the first time since 1998, in an effort to support the weakened currency, Reuters reports. The move caused the USD to drop more than 2% to about JPY 141.15 after previously trading more than 1% higher on the BOJ’s decision. The USD was pushed higher this year as a result of a hawkish US Federal Reserve kicking off an aggressive monetary tightening cycle this year, causing the value of the JPY to decline by almost 20%, reaching 24-year lows. Meanwhile, Turkey lowered (pdf) its benchmark rate by 1% to register 12%, maintaining that it expects the “disinflation process to start on the back of measures taken and decisively implemented for strengthening sustainable price and financial stability along with the resolution of the ongoing regional conflict.”
Not defying expectations: Switzerland’s national bank took its interest rate out of a decade-long negative territory with a 75 bps hike to register 0.5%, citing slower global growth and higher inflation, and signaled that it could intervene in FX markets, according to a statement (pdf). The Swiss National Bank is “willing to be active in the foreign exchange market as necessary,” the statement reads. Similarly, the Bank of England raised (pdf) its benchmark rate by 0.5% to register 2.25%, a high it has never hit since 2008.
The Central Bank of Egypt is due to sit down later today, with all eyes on whether the Monetary Policy Committee will go through with its third rate hike this year. As inflation rises and the EGP continues to weaken, seven out of eight analysts and economists we surveyed are expecting them to hike rates. The MPC is meeting under the direction of Hassan Abdalla, who took over as acting governor last month following Tarek Amer's unexpected resignation one day before the prior rate meeting.
Today’s decision is about more than just interest rates and could give indications on the future of the EGP, Mohamed Abu Basha, head of macroeconomic research at EFG Hermes told Bloomberg. “The market will be looking for clues about broader monetary policy directions and any hints about the central bank’s future moves,” he said, adding that a 100 bps hike seems “warranted.”
Also getting lots of ink in the international press: Russia arrested more than 1.3k protesters in anti-mobilization demonstrations, following president Vladimir Putin’s order yesterday to draft the country’s 300k-strong reserve for the first time since WWII, the Guardian reported, citing a Russian human rights watchdog. Organizing and participating in protests is punishable by up to 15 years in prison under Russian law. The decision saw demand for one-way flights out of Russia rise and prices skyrocket. France24, Reuters, and The Washington Post are also taking note.
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- The outlook for Egypt’s IPO and M&A pipelines, according to EFG Hermes investment banking boss: IPO activity could return in 2Q and 3Q 2023, while momentum from record M&A activity in 2022 could carry through to 2023, EFG Hermes Co-Head of Investment Banking for Egypt told Enterprise.
- Things are not looking up for the Tawasol Holdings-LimeVest consortium’s bid to acquire Alex Medical, as a fair value study from Andersen adds weight to the board’s suggestion that the bid undervalues the company.
- SODIC is no longer interested in acquiring MNHD: SODIC has called off its takeover bid for Madinet Nasr Housing and Development and is currently reviewing other alternatives.
🗓 CIRCLE YOUR CALENDAR-
Our friends at HSBC are hosting an energy transition webinar series next Tuesday-Thursday, 27-29 September. The series will look at the “latest climate analysis in relation to the global energy market and transition to net zero” in six different sessions covering energy security, what is required to ensure the success of COP27, financing and investment needs for the energy transition, and the scaling up of renewables in the region, among other topics. You can register for the series here.
WANT MORE on the region’s energy transition? Catch this op-ed in EnterpriseAM by HSBC’s Group Head, Center of Sustainable Finance and Head of Climate Change Middle East, North Africa and Turkey, Zoe Knight on to the capital that’s needed to help drive that shift.
A Spanish business delegation will be in town next Tuesday and Wednesday (27-28 September) for the Egypt-Spain Multilateral Partnership Forum, organized by the Spanish Institute for Export and Investment, according to a press release (pdf). The two-day conference will include seminars and panel discussions on trade and investment in transport, energy, and water with Egyptian ministers and representatives from government bodies, alongside officials from international financing institutions and Spanish Secretary of State for Trade Xiana Méndez Bértolo. The agenda for the conference is available here (pdf).
☀️ TOMORROW’S WEATHER- It’s going to be a relatively warm weekend: We’re looking at highs of 35°C and 34°C tomorrow and Saturday, with lows of 24°C and 23°C, according to our favorite weather app.
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