Following Egypt's decision to devalue the Pound in November 2016 and subsequently repeg it to the Dollar, the country is now facing the challenge of avoiding a repeat of the cycle of devaluation and repegging that has characterized its economy since then. Experts suggest that allowing the Pound to float freely could be the solution to ending this cycle. In the meantime, the Egyptian Exchange's blue-chip EGX30 index has seen significant gains, rising by 4% in early trading and contributing to a record high after Egypt secured a deal with the IMF and received support from Aramco, lifting the Saudi market as well. Egyptian stocks have continued their rally, rising as much as 16% in three sessions, marking a world-beating stock rally after the devaluation of the currency and the securing of fresh funding to alleviate economic pressures.
Egyptian stocks have risen as much as 16% in three sessions. https://t.co/jPtYj77Jkn via @farahesque https://t.co/54e2c1z5v9
Egyptian stocks resume a world-beating stock rally after the North African nation devalued its currency and secured fresh funding to ease pressure on its economy https://t.co/2oKU1pr1jv
Egypt bourse hits record high after IMF deal, Aramco lifts Saudi https://t.co/XX5CSNNR8f https://t.co/LxcpaytwJl
Egyptian Exchange blue-chip EGX30 index rises by 4% in early trading. https://t.co/lZwBKAkheH
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