The US Bloomberg agency said that increased pressure on the Egyptian economy led the world’s largest banks to believe that Cairo needed to weaken its currency again.
informed agency The Egyptian currency’s greater flexibility has become a necessity in light of Cairo’s push for a new loan from the International Monetary Fund, the same reference made in a report from the same agency last week that said The inevitable devaluation of the pound.
The agency cited analyzes by Deutsche Bank, Goldman Sachs and Citigroup that said the Egyptian currency was revalued even after it devalued by more than 15% in March.
High oil and commodity prices have heavily affected Egypt, the world’s largest wheat importer, as well as the influence of tourists from Russia and Ukraine.
Urban inflation accelerated in Egypt in July after a month of calm, as rising food prices and local fuel price hikes put more pressure on consumers.
The July number could give the central bank additional incentive to raise interest rates at its August 18 meeting.
Markets will also be looking for any signs that the central bank is preparing to allow the currency to fall further after global investors pulled billions of dollars out of the Egyptian debt market this year.
And Bloomberg pointed out that, in the meantime, the Egyptian government is taking other steps to support its financial resources as Cairo is considering a loan of about $2.5 billion and is in talks with regional and international banks over the details of the financing.
She explained in context that funding from the Gulf provides the backbone as the Saudi Arabian Sovereign Wealth Fund arm acquired government stakes in four Egyptian stock exchange-listed companies for $1.3 billion as part of the Kingdom’s commitment to channel resources.
Source: “Bloomberg”