The Clap According to Bloomberg, investors are gearing up over speculations of an upcoming EGP devaluation.
What This has been reflected in many ways, according to the media outlet:
The non-deliverable three-month forwards (NDFs) for the EGP fell by 14% since October
The Commercial International Bank’s (CIB) GDRs in the London Stock Exchange (LSE) are trading at USD 1.25 as of Thursday
So What This shows that investors are expecting a devaluation early next year.
In addition, if the gap (exchange rate balancing) between CIB’s stock and GDRs widens, it might be a sign of an upcoming devaluation. The current exchange rate balancing of CIB is EGP 57.6 per dollar, as of Thursday.
Some context The EGP/ USD parallel exchange rate exceeded the 50 mark last week.
Egypt has devalued the EGP three times since 2022. But, it hasn’t moved yet to a flexible exchange rate, one of the IMF program’s conditions.