Egypt Stocks Drop Most in World After Surprise Rate Increase
- Central bank sees inflation risks despite monthly rate decline
- IMF said last month taming inflation was policy priority
The exterior of the Egyptian stock exchange is seen in Cairo, Egypt, on Wednesday, Dec. 29, 2010. Egypt's benchmark EGX30 Index may gain as much as 24 percent next year as higher crude prices boost money available for investments by Persian Gulf countries, EFG-Hermes Holding SAE said.
Photographer: Shawn Baldwin/BloombergEgyptian stocks fell the most in the world on Monday after the central bank unexpectedly raised interest rates to contain surging prices, a month after IMF remarks that were seen favoring higher borrowing costs to tame inflation.
The EGX 30 Index closed down 2.5 percent, the most among indexes tracked by Bloomberg. The Monetary Policy Committee raised the benchmark overnight deposit rate by 200 basis points, or two percentage points, to 16.75 percent, the bank said late Sunday. The lending rate was also raised by the same amount to 17.75 percent. All but one of the seven economists surveyed by Bloomberg had forecast the rate to stay unchanged.