Egypt’s devaluation ushers in volatility as pound plumbs new low

Egypt’s devaluation ushers in volatility as pound plumbs new low

A plunge in the Egyptian pound signaled a fresh bout of volatility for the currency, with analysts expecting further depreciation ahead.

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Following a slide of more than six percent on Wednesday, the pound fluctuated between gains and losses. It fell as much as 2.3 percent to a new low of 27.0481 per dollar as of 1:40 p.m. in Cairo on Thursday. The country’s central bank hasn’t commented on the moves.

The latest depreciation indicates Egypt “secured some external support as a prelude to the move,” Cairo-based Naeem Brokerage said earlier in a note. It expects the pound to weaken by another five percent “in the immediate future, almost closing the gap with a parallel-market rate of 29-30 per dollar.”

The North African country needs to unlock more financing from abroad as it tries to clear the logjam of imports at its ports while foreign exchange remains scarce. Egypt let the pound weaken twice in 2022, eventually clinching a $3 billion loan from the International Monetary Fund with a pledge in October to adopt a flexible exchange-rate.

The “adjustment so far has been significantly more limited compared to the first two devaluations