EGPT - Egypt: Bold Moves

2024-03-09 01:00:00 ET

Summary

• The US dollar-Egyptian pound exchange rate has been devalued by 38%.
• The Egyptian equity market, as represented by the EGX 30 index, has risen by 68% in local currency terms and is essentially flat in US dollar terms since September 2023.
• Egypt’s difficult financial adjustment, along with a pledge of structural reform under the IMF program, is likely to increase domestic confidence and boost investment.

Egypt has made the adjustment investors were waiting for. The US dollar ((USD))-Egyptian pound ((EGP)) exchange rate has been devalued by 38%, and the government has agreed to an increase in its loan program with the International Monetary Fund (IMF) to US$8 billion. ¹ It also recently agreed to make a long-term investment with the United Arab Emirates ((UAE)), which will pay US$35 billion for property development rights on Egypt's Mediterranean coast. ² We adopt a neutral stance toward Egyptian equities for now....

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