Capital Economics reiterates 7.5% of Egyptian Pound after turning to IMF – Egypttoday

Capital Economics reiterates 7.5% of Egyptian Pound after turning to IMF – Egypttoday

CAIRO - 28 April 2020: Capital Economics reiterated its expectation of a 7.5 percent depreciation of the Egyptian pound to reach $17 by end of 2020 after the state announced returning to the International Monetary Fund (IMF).. "Egypt's turning to the International Monetary Fund (IMF) means that the authorities are likely to loosen their grip on the pound sooner rather than later," it added.. Monetary policymaking has improved in recent years and, by keeping real interest rates elevated, the central bank has brought inflation under control.. "Allowing the currency to depreciate will negate the need to keep interest rates high in order to attract capital inflows and, with inflation well-anchored, the central bank is likely to follow up last month's emergency 300bp interest rate cut with further easing to support the economy," it stated, expecting the benchmark overnight deposit rate to be lowered by an additional 225bp, to 7 percent, over the coming months.. Upon the board's approval in November, Egypt embarked on a bold economic reform program that included floating its currency, losing around 50% of its value, as part of the economic reform program which imposed taxes, including the value-added tax (VAT), and cut energy subsidies, all