By Abd Elkader Ramadan

CAIRO, Dec. 2 (Aswat Masriya) - The Egyptian stock exchange climbed 3.5 percent on Wednesday after the Central Bank of Egypt (CBE) announced that it has paid up the accumulated debt of $547.2 million to foreign investors.

The index for small and medium enterprises EGX 70 rose by 2.93 percent and the broader EGX 100 climbed by 2.01 percent.

Despite today's hike, the stock exchange administration suspended trading on several stocks for half an hour for exceeding the maximum drop allowed during a single session, 5 percent.   

Ahmed Zakaria, the director of customer accounts at Okaz Securities Brokerage said it is "clear" that the market ended its downward trend, linking the climb with the CBE's surprise announcement.

On Tuesday, the CBE said in a statement on its website that it has cleared "all the pending backlog" owed to foreign investors "to date".

Mohamed Elaasar, technical analyst at Watani Financial Services agrees that paying the accumulated dues to foreign investors has contributed to the market's quick climb, adding that he expects the announcement to support the stock market's stability and investor confidence.

Many foreign investors rushed to sell their assets following the January 2011 uprising, a volatile period for Egypt's economy.

They were set to be paid in dollars but could not transfer their funds abroad since the Egyptian government could not supply the millions of dollars owed to them, amid a dollar shortage in Egypt. They were placed on payment schedules.

Elassar believes that ease of entering or leaving a market is a very important element, when it comes to attracting investors.

"What the bank did yesterday assures investors that they will not face issues exiting the market," he added.

The CBE is now led by new governor Tarek Amer, who came in to replace Hisham Ramez after the latter's tenure saw multiple depreciations of the Egyptian pound.

When Ramez took over in 2013, the Egyptian pound was changing hands at 6.5 pounds to the dollar but by the time he handed over the CBE leadership to Amer, the pound had weakened to 7.73 to the dollar.

Egypt's economy has been hit hard by the political turmoil which gripped the country since the 2011 uprising toppled former President Hosni Mubarak taking a toll on tourism and cutting foreign reserves by more than half. 

In June, the CBE said it covered "fifty percent of foreign investors' pending backlog", in efforts to "ensure the domestic market's efficiency and strength" and said the remaining backlog would be paid in the near future.

The state is trying hard to attract investors and their much needed cash inflows and has hosted a major investment conference in March 2015. The Egyptian state has even amended investment legislation earlier this year to create a more favourable climate for investors.