The EGP will inevitably regain strength, but the government needs to win credibility first, Patrick Werr writes in The National. He believes that the central bank might have been “quietly telling bankers in recent days not to let the currency weaken further” and cross the “psychological barrier” of EGP 20 per USD 1. Werr says the central bank should resist the urge to intervene as the main concerns now are ensuring that EGP holders can convert it and to rebuild confidence in the currency. One way to do that, he says, is to remove the ambiguity surrounding the terms of the IMF financial package to end speculation on issues like a rumored new real estate and capital gains taxes and further increases in fuel price. The whole point of the reform package “was to win credibility,” Werr says, “but much of this could be lost if the agreement is not made public. Egypt’s policymakers would be doing the country a world of good if they would publish the programme while allowing the pound to slide until supply meets demand. They could then sit back and enjoy its inevitable bounce.”

Senior bankers with whom we spoke yesterday suggested that the strengthening of the EGP over the past week was the result of a number of factors, none of which was CBE intervention. The biggest factor, one said: “The usual slowdown in LC requests that comes at Christmas and New Year’s. In fact, we think the EGP would have appreciated a bit more had it not been for significant buying from gold merchants.”