Egypt's long term foreign and local currency sovereign ratings were downgraded to B from BB- by ratings firm Capital Intelligence, as political uncertainty continues to weaken the North African country's economy.
The rate cut coincided with a further downgrade of Egypt by Moody's Investor Service last week as the uncertainty and continued violence erode confidence in the economy and make the transition to stability in the post Hosni Mubarak era more difficult.
The rating agency said a decline in the central bank's foreign currency reserves (which cover less than three months of imports), the increase in dollarisation levels and the outflow of capital underpinned its decision and illustrated the continuing deterioration of public finances.
The North African country's central bank increased interest rates last week for the first time since 2011 prior to the moves by Capital Intelligence and Moody's in a bid to curb inflation. The Egyptian pound has lost about 10 percent of its value against the dollar since last year.