A recent report from the Central Bank of Egypt (CBE) shows that the domestic liquidity of the Egyptian banking sector increased in June 2023. It rose to EGP 8.248 trillion ($266.9 million) from EGP 7.402 trillion in December 2022, reflecting an increase of EGP 845.4 billion.
The Central Bank said the money supply rose to EGP 2.060 trillion compared to EGP 1.739 trillion while the cash circulating outside the banking system recorded EGP 1.009 trillion compared to EGP 831.2 billion.
As per the CBE, non-governmental deposits in local currency with banks operating in the local market increased by EGP 311.5 billion. In June 2023, the total non-governmental deposits were EGP 5.722 trillion, compared to approximately EGP 5.411 trillion in December 2022.
The CBE disclosed that the volume of demand deposits in local currency amounted to EGP 1.051 trillion, up from EGP 908.3 billion.
The public business sector had EGP 59.094 billion of those deposits, while the private sector registered EGP 674.419 billion, and the family sector amounted to EGP 318.711 billion.
The report highlighted that the volume of time deposits and certificates of savings in the local currency was approximately EGP 4.671 trillion, up from EGP 4.503 trillion. It also noted that the public business sector acquired about EGP 84.375 billion of those deposits. Meanwhile, the private sector had EGP 310.750 billion, and the family sector amounted to EGP 4.275 trillion.
Non-governmental deposits in foreign currencies with banks operating in the Egyptian market increased to about EGP 1.516 trillion in June 2023, up from about EGP 1.160 trillion in December 2022.
As per the Central Bank’s revelation, the volume of demand deposits in foreign currencies was approximately EGP 386.227 billion, while the volume of time deposits and certificates of saving amounted to about EGP 1.129 trillion.
Race to attract liquidity
Egyptian banks are now competing to attract Egyptian funds to withdraw liquidity from the local market while also preserving their share of dollar deposits or deposits in local currency.
On July 1, Banque Misr and the National Bank of Egypt (NBE) announced the launch of two new U.S. dollar investment certificates. These certificates offer returns of up to 9 percent and are the largest banks owned by the state.
A three-year savings certificate for individuals was recently issued by the Arab African International Bank (AAIB) in Egypt, as per a CNN report. It offers a 40 percent cumulative return paid in advance.
Egyptian banks decided to offer certificates of cumulative upfront return just a week before the CBE’s Monetary Policy Committee meeting. In June, the committee kept the interest rate at 18.25 percent, following a 200 basis points increase in March.
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