On a more positive note, S&P believes that the International Monetary Fund (IMF) could release the postponed disbursements of its $3 billion loan to Egypt, subject to an exchange rate adjustment
Standard & Poor (S&P) recently unveiled its projections for the upcoming devaluation of the Egyptian pound as Egypt continues to struggle with a foreign currency shortage exacerbated by Red Sea turmoil, expecting Egypt to adjust the EGP against the USD from EGP 30.96 to be more in line with the unofficial black market rate, which the agency wrote as EGP 60.
Business Today Egypt confirmed that, on January 29 at 11 AM, the EGP was trading at 70-75 against the USD in the black market.
On a more positive note, S&P believes that the International Monetary Fund (IMF) could release the postponed disbursements of its $3 billion loan to Egypt, subject to an exchange rate adjustment.
“We think more clarity on exchange rate policy would benefit trade and economic growth and trigger an increase in remittance inflows,” it added.
The report also mentioned the shortage’s impact on Egyptian banks, noting that it places additional pressure on banks’ funding profiles, and highlighted the recent restrictions applied on credit cards regarding foreign currency transactions.
S&P expects local banks' liquidity positions to continue to deteriorate.
The agency also pointed towards the declining traffic through the Suez Canal, caused by security concerns and rerouting of vessels due to Houthi attacks on international shipping in the Red Sea, as a contributing factor to the FX shortage.
