Cairo – Mubasher: The Egyptian Exchange (EGX) is expected to be negatively affected during the current period by the Central Bank of Egypt’s (CBE) unexpected decision to raise interest rates by 200 basis points on Sunday, analysts told Mubasher.

During the meeting of the CBE’s Monetary Policy Committee (MPC), the bank increased its overnight deposit rate to 16.75% from 14.75% and its overnight lending rate to 17.75% from 15.75%.

Market analyst Hisham Hassan said that the CBE’s move was unexpected, noting that it may affect the performance of the short-term investors.

Hassan added that the market is likely to retreat to lower than 11,800 points, expecting the main index to face resistance at 13,000 points, and to have supports at 12,625, 12,325 and 12,050 points.

Likewise, analyst Huda El-Menshawy sees that raising interest rates will negatively affect the EGX, as investors will be attracted to the high and safe returns by banks instead of trading their money in the stock market. 

However, El-Menshawy believes that foreign and Arab investors are going to benefit from these high rates, which will lead to a decline in stock prices.

The benchmark EGX30 rose on Sunday by 0.17% or 22.37 points to the level of 12,974.75 points.