Egypt's real interest rates have risen in comparison to other emerging economies, such as Turkey and Ukraine, after the sharp drop in inflation and reaching its lowest level in seven years, an additional incentive to invest in Egyptian domestic debt instruments.
The Central Agency for Public Mobilization and Statistics (CAPMAS) announced that inflation continued to decline for the fourth consecutive month, reaching 4.8% in September from 7.5% in August, reaching its lowest level since 2012.
According to Bloomberg, the real interest rate in Egypt is now around 8.5%, after putting inflation in the account, which is more than the real interest in Turkey and Ukraine to become the highest real interest in the world.
With the Central Bank of Egypt easing monetary policy strongly, the continuation of the current interest rate ensures that the Egyptian pound remains the preferred currency for trading, as investors borrow in low-interest currencies in their countries and invest in local assets of high interest countries such as Egypt.
Meanwhile, Egypt's inflation rate is now below the central bank's target until the end of 2020.
In the exchange market, the pound rose against the dollar to its highest level since mid-September last, continuing to perform well, which made it the best currency against the dollar this year, after the Ukrainian currency.
The Egyptian Finance Minister said that a real interest rate of 3%, which increases or decreases by one percentage point, is "an acceptable real rate that keeps Egypt attractive" to investors.