Bloomberg: Egypt "Best Reform Story" in Emerging Markets

In a recent report, Bloomberg said that despite the decision of the Central Bank of Egypt (CBE) to fix interest rates, the Egyptian debt instruments are still the most promising global opportunity for investors.

"Foreign investors are attracted to Egypt because of what Renaissance Capital has described as the best economic reform in emerging markets," Bloomberg said.

"Egypt continues to provide the largest revenues in the world to invest in debt instruments during the year," the financial institution added.

Earlier this week, the CBE's Monetary Policy Committee (MPC) decided to keep the overnight deposit and lending rates at 15.75 percent and 16.75 percent respectively.

The report pointed out that the Egyptian currency is the second most-followed currency on Bloomberg after the Russian ruble.

Egypt's reduction of one-time interest rates in more than a year supports the stability and the strength of the Egyptian pound.

[caption id="attachment_53196" align="aligncenter" width="492"] The Central Bank of Egypt (CBE) headquarters, Cairo[/caption]

Due to high revenues from investing in governmental debt, along with a strong pound, nearly half of debt holders are foreigners.

Since the beginning of this year, the exchange rate of the pound has strengthened against the US dollar. The Egyptian currency appreciated about 6 percent or EGP 1.04 against the greenback.

Egypt's status as a country attracting debt investors is unlikely to be affected, as investors borrow in countries with low-interest rates and invest in high yield countries.

Almost all the surveys carried out by Bloomberg poll expected the MPC to keep its key interest rate at 15.75 percent.

"Interest rates may continue to stabilize in Egypt during the second half of the current fiscal year," the report added.

Bloomberg pointed out that the Egyptian pound has advanced to become one of the best-performing currencies this year.

Meantime, Egypt offers one of the biggest annual yields on debt instruments at about 17 percent, three times the average return in any other emerging market.