Global Courant
Citi group expects that the Central Bank of Egypt can resort to delay in devaluation of the Egyptian pound against the US dollar through at least the end of June, prompting traders to lower their expectations regarding the devaluation.
Credit rating agencies are calling on the Egyptian government to adopt a more flexible exchange rate that reflects the country’s external financing needs, depending on supply and demand.
A flexible exchange rate is also a key requirement of the International Monetary Fund, as it has signed a financing agreement with Egypt worth three billion dollars end of 2022.
Bloomberg reported that Citigroup analyst Luis Costa said allowing another sharp fall in the pound before the end of Egypt’s fiscal year on June 30 would defeat the government’s goal of a budget deficit of 6.5 percent and to stabilize the debt ratio.
According to Costa, Egypt’s Central Bank will also likely wait until “bumper tourism” revenues of around $14 billion have trickled through the economy before deciding whether another pound recalibration is needed.
“The CBE is unlikely to mount another aggressive devaluation of the pound in the coming month,” Costa wrote in a note.
Speculation indicates another devaluation of the currency is approaching, the fourth since March 2022.
The US dollar currently circulates in the official sector at LE30 pounds and between LE38 and LE40 on the black market.
The Gulf states are waiting for more certainty about the currency before fulfilling their promises to provide billions of dollars in investments, while the government is waiting for the end of the current fiscal year (end of June).
