Egypt Billionaire, Naguib Sawiris, has called on the government of the country to devalue the country's legal tender, Egyptian Pounds, over a mismatch in the exchange rate at the National Foreign Exchange Import and Export Window and the black market.
Sawiris insisted that any delay in the devaluation of Egyptian Pounds is nothing but postponing
Sawiris posted on his X timeline, "Postponing reforms is a disaster that will increase the extent of the critical situation we are in,” he said in Arabic language.
In recent days, Egypt's Pounds have traded against the U.S. dollar in the parallel market at the rate between 68 and 70 per dollar, leaving it more than 50% weaker than the official rate of about 30.9.
“The right way is to start from the black market rate and then it will go down gradually, so everyone would agree on selling their dollars through the official channels if the two rates became equal,” Sawiris said.
Speaking against suggestions by many experts that Egypt needs to devalue its currency gradually, Sawiris said “Any attempt to solve the dual exchange rates by offering the dollar at a lower rate than the black market won’t be successful.”
If Egypt devalues its currency again, it will be the fourth time Egypt's Pound has devalued against the dollar since 2022. This has led to inflation and a rise in price in the commodity market.
To hedge themselves against the devaluation-inflation spiral in the country, local investors have been flocking to the stock market. The benchmark EGX30 index rose more than 18% in January in dollar terms, making it the world’s third best-performing stock exchange, after Argentina and Nigeria. Derivative traders have meanwhile been ramping up their bets on a devaluation through short-term non-deliverable forwards
Egypt secured a $3 billion rescue package from the International Monetary Fund more than a year ago, but "the Washington-based lender has delayed two reviews of the pact, waiting for authorities to allow a more flexible exchange rate and make good on other promised reforms before handing over more funds," Bloomberg claimed.
Tag: Egypt Billionaire Urges Urgent Devaluation of Egyptian Pounds to Save Future
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Published 2/4/2024 10:03:09 PM