The EGP hit a new historical level against the USD, after falling more than 16% to bring its value at EGP 32 to the dollar.
The CBE allowed the EGP to float in line with the agreement between Egypt and the IMF to adhere to a flexible exchange rate, and to intervene only at times of currency fluctuations.
The EGP’s rebound to EGP 29.7 after breaking the EGP 32 barrier may be evidence of a flexible FX rate, as this decline could be a result of the sale of large quantities of dollars after it exceeded EGP 32.
One of the goals of currency devaluation is to eliminate the black market for USD by bringing the official exchange rate closer to the rate on the black market, which registered a bit more than EGP 31, according to Bloomberg.
Some analysts believe there is no specific target price expected because the currency is left to market factors. This is at a time when investment banks like Goldman Sachs expect the FX rate to range from EGP 33-EGP 35 to the dollar.
The stock exchange responded positively to the depreciation of the pound, with the EGX increasing by more than 4% in the middle of the session, before ending the session up 0.42%.
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