CAIRO - 20 August 2023: President Abdel Fattah El-Sisi issued a decree, on Thursday, to extend the appointment of Hassan Abdalla as Acting Governor of the Central Bank of Egypt (CBE) for another year, ending on August 17, 2024.
Abdalla succeeded the former governor Tarek Amer, who resigned from the position a year before the end of his term.
Abdalla's appointment comes amid an economic crisis in Egypt, marked by internal currency shortage and global interest rate hikes that have impacted emerging markets, including Egypt.
Foreign reserves grow by $1.73 billion
The foreign exchange reserves at the Central Bank increased to about $34.9 billion at the end of July 2023, compared to $33.14 billion in the previous August, representing a growth of $1.73 billion during this period.
Depreciation of the pound
The exchange rate of the US dollar at the CBE increased from about LE 19.19 on August 18, 2022, to about LE 30.9 currently. This indicates a loss of around 37 percent of its value since Abdalla took office in August 2022.
The dollar exchange rate reached LE 22.99 on October 27, 2022, the same day that the Monetary Policy Committee held an extraordinary meeting and decided to raise interest rates by 200 basis points.
The pound continue to depreciate against the dollar until it crossed the 30-pound mark for the first time on January 30, 2023, reaching LE 30.03 per dollar.
The core inflation rates, which strips out certain volatile categories, soared to a record high of 41 percent at the end of June, then slightly decreased to 40.7 percent in July. The CBE struggled to control inflation rates amidst the decline of the Egyptian currency.
800bps increase in interest rates
The decision to appoint Hassan Abdullah as Acting Governor of the Central Bank was issued on Thursday, August 18, 2022, a few hours before the Monetary Policy Committee meeting to consider interest rates.
The latest meeting of the Monetary Policy Committee before Abdullah's appointment was on June 23, 2022, where interest rates remained unchanged. This was the same decision in its following meetings on August 18 and September 22, 2022.
The deposit and lending rates for overnight lending and the main operation rate at the Central Bank were 11.25 percent, 12.25 percent, and 11.75 percent, respectively.
The committee held an exceptional meeting on October 27, 2022, and decided to raise interest rates by 200 basis points. This marked the first interest rate hike during Hassan Abdullah's term.
In December 2022, the committee decided to raise interest rates by 300 basis points and kept them unchanged in February 2023. It then raised them by 200 basis points in the meeting on March 30, 2023.
The committee kept interest rates unchanged in the May and June meetings, only to raise them again by 100 basis points in the August 3, 2023 meeting.
This brought the deposit and lending rates for overnight lending to 19.25 percent, 20.25 percent, and 19.75 percent, respectively.
The Egyptian street currently anticipates a new pound devaluation following Egypt's recent agreement with the International Monetary Fund, which granted Egypt $3 billion. The agreement includes Egypt's commitment to a flexible exchange rate.
Who is Hassan Abdalla?
Abdalla previously held the position of Chairman of the United Media Services, succeeding Tamer Morsi.
Hassan Abdalla began his professional journey at the Arab African International Bank in Egypt in 1982. He then moved to the bank's branch in New York in 1988, where he was appointed Assistant to the General Manager in 1994, becoming the General Manager in 1999. He later became the Deputy Chairman and Managing Director of the bank in 2000.
Abdalla held several executive positions, including membership in the boards of the Arab-French Union of Banks in Paris, the German-Arab Chamber of Industry and Commerce, the Advisory Board for Emerging Markets, and the Central Bank of Egypt.
He also served as a faculty member at the American University in Cairo and was a member of the Strategic Advisory Board at the School of Business at the American University in Cairo.