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Wednesday, October 4, 2023


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WorldEuropeTourism could be a 'lifeline' for the Egyptian pound until September

Tourism could be a ‘lifeline’ for the Egyptian pound until September

The shift in sentiment follows signs that the Egyptian government is stepping up efforts to sell or list state-owned companies, in addition to an expected recovery of the tourism sector to pre-pandemic levels.

“As far as the Egyptian economy is concerned, we expect that we have reached the peak of pessimism,” Luis Costa, head of emerging markets sovereign credit at the American Bank, said in an interview.

Costa said Citigroup had adopted a more positive outlook “for short-term Egyptian pound and dollar-denominated bonds” due to the easing of the country’s currency crisis and easing investor concerns about the debt restructuring.

Meanwhile, derivatives traders are betting that the Egyptian government will allow the pound to fall sharply again in the coming months, having lost half of its value following a series of devaluations since then. March of last year.

Costa pointed out that any decision on the devaluation of the Egyptian currency could be postponed until next September, coinciding with the date of the International Monetary Fund’s review of the extent of the commitment to a rescue program worth of 3 billion dollars, or one month after this date during the annual meetings of the International Monetary Fund and the World Bank in Marrakesh Morocco.

“This summer season could be an important stabilizing factor in the short term until we start getting serious reviews again in September and October,” said Costa, who is also Citigroup’s chief strategy officer for the Central and Eastern Europe, the Middle East and Africa.

While the currency is likely to remain “reasonably stable” over the next two months, Citigroup expects the Egyptian pound to weaken to 36 against the dollar by the end of this year, and 37 next year. next, according to forecasts from the London-based strategist, who said the Egyptian pound is down. Currently in “Range Neutral Rating”.

Citigroup said the entry of hard currency into Egypt must be through foreign direct investment agreements.

Egypt needs to attract more external financing to clear the backlog of foreign currency orders from importers and other businesses.

The Egyptian pound has seen a relative rise against the dollar in the parallel market over the past few days, with the exchange rate rising from 42 to 38 pounds per dollar.

It should be noted that Citigroup had ruled out last month that the Central Bank of Egypt would devalue the Egyptian pound in the near future, at least until the end of next month.

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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