Citigroup expects no further EGP devaluation until September
Updated 6/8/2023 2:40:00 PM
Arab Finance: Citigroup expects Egypt to avoid further currency devaluation until at least next September, Bloomberg reported on June 8th.
The bank also predicts that bumper tourism revenues and government asset sales will mitigate the pressure on the Egyptian economy.
“We have reached a little bit of a peak pessimism when it comes to Egypt,” Luis Costa, the global head of emerging-market sovereign credit at the US bank, said in an interview with Bloomberg.
Costa said that this forecast comes after indications that the government is speeding up efforts to sell or partially list state-owned businesses, as well as an anticipated recovery in Egypt's tourism sector to its pre-pandemic levels.
Citigroup has "established a more positive view" of Egyptian pound and dollar bonds in the short term after easing the country's foreign-currency constraint and assuaging investor concerns about a debt restructuring, according to Costa.
After the pound lost half its value as a result of many devaluations since March last year, traders of derivatives have unwound bets that authorities will permit a substantial decline in the pound's value again in the coming months.
Any currency-weakening decision will likely be made in September, when the International Monetary Fund (IMF) is scheduled to assess a $3 billion rescue program, or a month later, during the IMF and World Bank annual meetings in Morocco, Costa pointed out.
“This summer season can be an important short-term stabilizer until we start getting serious reviews again in September and October,” Costa added.
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