Egypt’s two state-owned banks released U.S. dollar-deposit certificates with high-interest rates on Tuesday to try and lure hard currency back into the country’s financial system. Banque Misr and the National Bank of Egypt both advertised their offerings on Facebook, proposing a generous 9 percent annual interest rate for a three-year deposit certificate, payable upfront in Egyptian pounds, and an even more enticing 7 percent rate, paid quarterly in dollars, plus a right for depositors to receive half its value as a loan with a maximum repayment of 10 million pounds (approximately 324 dollars). Still, this development has sparked some caution among potential investors.
The two banks had announced that buying a certificate would take a minimum deposit of 1,000 dollars. Nevertheless, the Egyptian local currency had plummeted in value since March 2022, from 15.75 to 30.90 per dollar - with an even higher exchange rate of 40 pounds in the black market.
The Russia-Ukraine conflict further exacerbated this economic crisis, which threatened to disrupt the global food supply. As a major grain importer, Egypt had to face this challenge head-on as its inflation rate skyrocketed throughout the year to 36.8 percent in June, compared to 14.7 percent last year.
In response, the International Monetary Fund demanded that Egypt switch to a more sustainable exchange rate regime and approved a 3 billion dollar loan in December 2020 - yet this financial aid only served to obfuscate the true level of destruction caused by this economic turmoil.
