CBE denies it had a hand in EGP’s appreciation: CBE Governor Tarek Amer assured President Abdel Fattah El Sisi that the CBE had no hand in the EGP’s appreciation of around 1.3% last week in a meeting on Saturday. He told the president that market forces were entirely behind the strengthening of the currency — which is proving profitable for carry traders, according to an Ittihadiya statement picked up Al Borsa. The denial comes as analysts had speculated last week that the CBE had been artificially strengthening the EGP. Amer’s denials had been preceded by another from CBE Deputy Governor Gamal Negm to MENA news agency, where he reiterated that the CBE does not control currency fluctuations. Significant foreign inflows last week contributed to the strengthening of the local currency. Negm said that inflows during last week alone, which saw a single-day record of USD 704 mn, had amounted to around USD 2 bn.

"Right now, it’s a one way bet for the pound to appreciate, but if inflation continues, the risk changes to the downside," Mohsin Khan, Washington-based senior fellow at Atlantic Council’s Rafik Hariri Center for the Middle East, tells Bloomberg’s Ahmed Namatallah and Ahmed Feteha. "More volatility in the exchange rate would be good because it would show agents that market forces are at work and that the CBE’s main focus is bringing down inflation," he added.

With bond yields reaching 21% — the highest after Argentina — EM investors continue to be attracted to the country’s debt. Inflows in t-bills drew in around USD 9 bn in foreign inflows since the EGP was floated back in November, the highest level since 2010. "If you’re an emerging market investor, you can come in and buy the world’s second-cheapest currency, offering very high yields and very low volatility,” said Renaissance Capital’s global chief economist Charles Robertson.