Workers in the Egyptian auto market expected an unprecedented recovery in sales during the coming period, in conjunction with the Central Bank of Egypt's (CBE) decision to cut interest rates by 3%, when 70% of the sector's sales rely on loans.
Surprisingly, the Bank's monetary policy committee (MPC) decided, during an emergency meeting on Monday, to reduce the rates of overnight deposits, lending and the main operation price by 300 basis points to 9.25 %, 10.25%, and 9.75 %, respectively.
President of the Egyptian Automotive Dealers Association Osama Abu El Magd stressed that the sector depends mainly in its sales on car loans and may exceed 70%, explaining that the decision to reduce interest rates contributes to creating a big boom in the market.
Abu El-Magd said that the decision to reduce IR came at an appropriate time as all sectors globally are affected by the outbreak of the coronavirus, which claimed more lives in most countries of the world, unabated, with the total number of infections increased to more than 150 thousand cases.
He pointed out that the interest rate reduction will contribute to the elimination of all losses suffered by car dealers after the boycott campaigns and the high rate of interest adopted earlier in 2016, explaining that the market will witness a purchasing wave especially after the CBE raised credit limits of consumer loans from 35 to 50%.
In November 2016, the Central Bank of Egypt decided to liberalize the pound according to market supply and demand mechanisms.
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