Egypt’s Economic Future: Implications of Fixed Interest Rates on Gold, According to Economist’s RT Interview

Economist Said Imbabi expected price stability in the gold market in Egypt in the coming period and attributed this to the decision of the Central Bank’s Monetary Policy Committee to fix the interest rate.

The aforementioned decision was made in relation to online gold and jewelry trading as the committee decided at its meeting today, Thursday, to fix overnight deposit and loan repayment prices, as well as the central bank’s underlying transaction price at a rate of 18.25%, 19 .25% and 18.75%, respectively. Credit discount rate at the rate of 18.75%.

Imbabi explained that changing or fixing interest rates affects the exchange rate of the dollar in the official or parallel market, which is one of the factors affecting the determination of gold prices, and then fixing interest rates will lead to the stability of the dollar exchange rate, since as well as the price of gold.

He added that the stabilization decision was made on the basis of a decrease in inflation in April to a record 30.6%, which prompted the Central Bank to stabilize the interest rate at the current meeting, as well as leave the situation at the same level. its stability.

Impact of repeated rate hikes on markets

Imbabi, who is the chief executive of the dealing platform, pointed out that a repeat of interest rate increases would lead to a state of indiscipline in the markets, higher prices and reduced purchasing power and thus a tendency to freeze funds in assets and not use them in development projects, and traders and producers are being pushed to raise prices for hedging purposes. Local currency dilution, putting pressure on the end consumer.

In the same context, he pointed out that the decline in the ounce on the global stock exchange is associated with a state of optimism about the improvement of US negotiations on raising the debt ceiling, as well as the release of some strong US economic data. , which increased the likelihood of an increase in interest rates by the US Federal Reserve and increased pressure on gold.

Source: RT

Cairo – Nasser Hatem

Related Stories

Leave a Reply