Egypt's Pound Sinks Further Against Dollar After Flexibility Pledge

Business

October 31st, 6:45am

Asharq Al-Awsat

An employee counts Egyptian pounds at a foreign exchange office in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany/File Photo

Egypt's pound fell about 3% to 23.8 against the dollar as trading resumed on Sunday, Refinitiv data showed, after authorities committed to a flexible exchange rate under an International Monetary Fund support deal. The pound slid about 14.5% to 23.1 against the dollar on Thursday after they pledged a "durably flexible" exchange rate in conjunction with a staff-level agreement for a $3 billion IMF extended fund facility. Egypt's currency has been held steady or allowed to depreciate only gradually following previous sharp devaluations in 2016 and this March. It has weakened about 34% against the dollar so far this year. In a note on Thursday, JP Morgan said it considered the pound to be fairly priced, and that it expected a gradual adjustment to 23.5 to the dollar by the end of the year, Reuters reported "We expect USD/EGP to remain under pressure in the coming days as it finds a clearing level, but we view (Thursday's) adjustment as sufficient to close most of the external imbalances," the note said. Egypt has been struggling to cope with the impact of the war in Ukraine, which led to rapid outflows of portfolio investments, a hike in the commodity import bill and a drop in tourism revenues.

from Asharq AL-awsat https://english.aawsat.com/home/article/3961101/egypts-pound-sinks-further-against-dollar-after-flexibility-pledge