CBE: RRR Depends On Liquidity

Central Bank of Egypt will use all tools available to meet the liquidity requirements of local banks, said Rania Al-Mashat, assistant sub-governor.

They include the seven-day repurchase agreements the regulator started offering in March 2011 and local-currency required reserves ratio (RRR), she said at a conference hold in Cairo.

On March 20 The central bank reduced RRR for banks to 12 % in order to ease credit conditions in the market. That was the first cut in 13 years, Al-Mashat said, according to Bloomberg.

Dr. Rania Al-Mashat, Chief of Monetary Policy Division, affirmed that the foreign currencies reserves in any country reflects the macroeconomic situation, adding that Mexico have witnessed a decline in monetary reserves of foreign currency out from $ 22 to $ 6 billion in just one day but the country was able to increase these reserves to $ 120 billion by now.

Al-Mashat said that the relative calm witnessed by the Egyptian streets, contributed in increasing foreign capitals flows into Treasury bills with $ 600 million, those investments were affected again after Mohamed Mahmoud clashes.

She attributed the Central Bank’s decision of reducing RRR to 12% instead of 14% to support liquidity and supporting credit.
“RRR steadied for about 13 year and the current time is perfect to take such decision” Rania said.