USD/EGP: Egyptian pound’s gradual depreciation to continue in the short-term – BNP Paribas

Since March 2020, the deterioration in the global economic environment has stopped the appreciation of the Egyptian pound, Pascal Devaux from BNP Paribas reports. USD/EGP is trading at 15.7587.

Key quotes

“In 2019, the pound appreciated by 12% against the USD with the rise in current account receipts and sustained portfolio inflows. Since March, massive portfolio outflows have entailed the pound’s moderate 1.2% depreciation and a decline in the official foreign reserves of the Central Bank (CBE) by 11%.” 

“In the short-term, current account revenues should weather the drop in Suez Canal and tourism revenues (20% of current account receipts in total).” 

“The CBE’s FX liquidity and the IMF financial support should allow the CBE to ease pressure on the pound in order to limit imported inflation. The pound should continue to moderately depreciate at a pace close to that of the inflation.”