Page 23 - Issue 63

Vol.1 Issue 63 January 2024Vol.1 Issue 63, May 2024 ElITE

Furthermore, the CBE’s decision to will go beyond the regular consumer and

raise the interest rate will withdraw the will affect the domestic investors as well.
liquidity from the hands of the The finance cost will increase as the cost

Egyptians to prevent the currency of borrowing increases as well as the
traders from manipulating the dollar increase in the prices of imported raw
exchange rate again. It will also take materials as well as the domestic ones.

some time to fully assess the All these will eventually lead to an
consequences of this decision. Also, increase in the costs and of course will

raising the interest rate will prompt the affect the profits. Additionally, the
Egyptians to deposit their money in the Egyptian’s remittances from abroad
banks to make use of that high interest through the banking sector may not be

rate which will put an end to this recent immediate. Some also fear that the CBE
inflation. In addition to that, the decided to devaluate the Egyptian

unification of the exchange rate will pound without sufficient funds or
attract foreign investment as investors liquidity. The rise in the interest rate will

prefer the countries with a unified also have negative effects on the stock
exchange rate and tend to avoid the market because the liquidity of the stock

ones with the multiple exchange rates. market decreases as the interest rate
If we look at these results we can see increases. To add insult to injury, people
that some can happen in the short run will prefer to save their money banks

and some in the long run. For example, over the stock market which will lead to
if we look around right now, we can a drastic decrease in the price of stocks.

see that the black market started to As the consequences of this decision
vanish completely and that happened become apparent, we have to monitor

within just a month from the the short term results and have some
announcement. But a consequence like patience for the long term ones. Of such

the increase of the foreign investment decisions are not taken arbitrarily. They
may take a long time and that will are taken after careful and concise study
bring us to the other side of the debate, so all we have to do right now is have

people who see that this was not the faith and hope for the best.
right decision or at least not taken at

the right time. Because when this
decision was made, we were at the steps

of the holy month, Ramadan, where
the demand rises dramatically, and

that would lead to an increase in the
prices which may lead to a temporary
crisis during the month. . In addition to
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that, the consequences of that decision