S&P predicts official EGP rate to align with parallel market
Updated 1/29/2024 7:14:00 AM
Arab Finance: S&P Global Ratings expects Egyptian authorities to further devalue the Egyptian pound against the US dollar from EGP 31 to an aligned rate with the parallel market, according to the agency’s latest report on Egypt.
The Egyptian pound’s current rate in the parallel market reached 60 to USD, while the official rate against USD is at EGP 31.
The report showed that the shortfall in foreign currency has weighed on Egyptian banks’ funding profiles as several banks cut their foreign-currency credit and limit.
Hence, the agency forecasts liquidity positions at local banks to carry on weakening.
The agency also predicts the $3 loan under the country’s International Monetary Fund (IMF) program to be disbursed, with expectations that the loan could be extended, if the EGP-USD exchange rate undergoes adjustment.
Moreover, S&P attributed Egypt’s restricted foreign-currency position to the dwindling traffic through the Suez Canal due to the Houthis’ attacks on international shipping in the Red Sea.
Taking action concerning the exchange rate policy would bode well for Egypt’s trade and economic growth as well as for remittance inflows, the report highlighted.
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