Egypt has embarked on significant economic reforms, including a major policy shift on March 6, which saw the lifting of interest rates by 6 percentage points, the flotation of the currency leading to a 38% decline, and securing a loan agreement with the IMF. This series of moves comes amidst concerns of repeating past mistakes of currency devaluation followed by a repeg, as highlighted by the situation in November 2016. The country's economic challenges are further compounded by a sharp increase in inflation, with annual headline inflation rising to 35.7% in February from 29.8% in January. In response to these challenges, Egypt has received a commitment from the World Bank for $3 billion in additional support, part of an expected $20 billion IMF funding package. The Egyptian bourse reacted positively to the IMF deal, hitting a record high. Additionally, the Egyptian pound has steadied after its devaluation, and investors have poured funds into Egypt's first local currency t-bill auction post-float. These developments are part of Egypt's broader strategy to correct its economic path and manage its debt levels, amidst rising food and beverage prices driving inflation. Moreover, gold prices in Egypt have soared by 10.8%.
💡 Egypt: CPI inflation quickens to 35.7% y/y in February before pound devaluation - @EmergingMWatch on https://t.co/orvmA6Wqwk Full Story → https://t.co/67SbCEYsox
#Gold prices in #Egypt soar by 10.8%, 21k-gram jumps by EGP 355 Read more: https://t.co/9pe3US9xkq https://t.co/J3j0e7mP4q
CBE’s measures are necessary to correct Egypt’s economic path: Finance Minister https://t.co/08PrK9P7Nk
#Egypt’s Finance Minister hails #Moody’s decision, outlines future plans Read more: https://t.co/kZpNFYd8VY https://t.co/2euaCFaQzF
#Egypt’s annual urban consumer price #inflation jumped to 35.7 percent in February from 29.8 percent in January, driven mainly by a rise in food and beverage prices, data from statistics agency CAPMAS showed. https://t.co/b5qEUQc5V2
#Egypt’s annual core #inflation rate records 35.1% in February 2024, up from 29.0% in January 2024: CBE https://t.co/kXbf2aniFP
Egypt says land sale, IMF accord will ease budget problems https://t.co/ta6yHXKdPc https://t.co/wMh3H7tPC2
The #WorldBank will provide #Egypt with $3 billion in support now that the North African nation has secured an expanded International Monetary Fund program, Finance Minister Mohamed Maait says. https://t.co/ZVy4SeEx1N
CBE’s interest rate hike sparks reactions from banks Read more: https://t.co/D020sZ3xWx #Egypt #InterestRates #Inflation https://t.co/bS0fvqeGr0
Egypt bourse hits record high after IMF deal, Aramco lifts Saudi https://t.co/XX5CSNNR8f https://t.co/LxcpaytwJl
The World Bank will provide Egypt with $3 billion in additional support https://t.co/1Kwdj5spLs
#Egypt will receive $3 billion in funding from the #WorldBank, its finance minister says, part of an #IMF funding package for the country worth an expected $20 billion. https://t.co/ZVy4SeEx1N https://t.co/2JFjT5rfV0
Investors pour funds into Egypt’s first local currency t-bill auction post-float https://t.co/BXpGOqTlMn
Egyptian pound steadies after devaluation, IMF deal https://t.co/6BKh53Lsb8
Egypt's annual urban inflation jumps to 35.7% in February https://t.co/EdslvAV8qD https://t.co/WYYq8JGXtj
Egypt’s annual headline inflation rises to 35.7% in February up from 29.8% in January https://t.co/fMjOCMRQDH
Egyptian inflation unexpectedly accelerated in February, in a trend that may continue after a much-anticipated flotation of the pound aimed at turning around the troubled economy https://t.co/t4Oi5YKaM3
Argentina (lhs) had elections Nov. '23 and devalued Dec. '23. Egypt (middle) had elections Dec. '23 and devalued this week. Turkey (rhs) has elections March 31 and will devalue right after. The worst kind of FX peg is political. Financial markets don't forget this kind of thing. https://t.co/LZ6DBS1MKX
#EgyptWatch🇪🇬: PRES. SISI + IMF LOANS = EGYPT DROWNING IN DEBT. https://t.co/uC4o1Rpqvo
This is Egypt's Pound since 2016: a never-ending cycle of devaluation, followed by a repeg that plants the seed for the next devaluation. Egypt now has the chance to end this cycle by letting the Pound float. Even if scary at first, Egypt will be so much better off medium term... https://t.co/xtPaOWGMUz
Right after Egypt devalued the Pound in Nov. 2016, it repegged the Pound to the Dollar. That repeg created a risk-free carry trade and hedge funds piled into local currency debt (red). Egypt now must avoid a repeat of this. Best way to do that is to let the Pound float freely... https://t.co/vQCx8R7ihu
5 things that happened this week (Egypt special): Big policy moves on 6 March: - Lifting interest rates by 6 percentage points - Floating the currency, leading to a 38% decline on the day (chart) - Agreeing on a loan with the IMF 1/5 https://t.co/aqg0POZhN4 https://t.co/MLtYsHbJ4C