Egypt moved forward with the latest devaluation after receiving assurances from the International Monetary Fund, aiming for the pound to match the black market
The Egyptian pound saw another devaluation today, plummeting to a record low of 32.2 at around 1 pm against the USD, before appreciating to 29.77 (2:43 pm CT). The EGP kicked off the day at 27.7.
Egypt moved forward with the latest devaluation after receiving assurances from the International Monetary Fund, aiming for the pound to match the black market.
The IMF did warn that the durability of Egypt’s policy shift “remains to be proven and the central bank may face political and social pressure to reverse course”.
In a note to clients yesterday, Goldman Sachs wrote that the EGP will most likely hit the depreciation implied by the parallel market (aka. black market); this was noted as close to 35 at the time.
The CBE has allowed the currency to devalue against the USD four times in the past 12 months – in March, October, December 2022 and the past week, resulting in the largest single-day fall since October.
The EGP at the state-owned banks is currently trading as follows; the National Bank of Egypt at 29.75 for both purchasing and selling, while Banque Misr is trading at 29.75 for purchasing and 29.8 for selling.
“The authorities’ recent commitment to a durable shift to a flexible exchange rate regime and to unwind prior policy distortions, supported by an upfront monetary policy tightening and further enhancements to the social safety net, are welcome steps” Managing Director of the IMF, Kristalina Georgieva, said in the IMF’s release on Egypt’s $3 billion loan yesterday.
*Updated with latest numbers
