EGP expected to appreciate 14% this year -The Economist
The EGP is among 12 currencies expected to appreciate against the USD in 2017, Economist Intelligence Unit chief economist Simon Baptist writes. “Our most bullish call is for the EGP; we think that the markets have overshot after the welcome float of late 2016 and expect a 14% appreciation this year,” he added.
Current account deficit to narrow: The EIU has also taken note of a sharp month-on-month increase in remittances to Egypt from expats working abroad. “The increase in remittances [to USD 1.7 bn in November from USD 1.3 bn the month before] is likely to reflect the impact of the sharp devaluation of the EGP. … Remittances have been declining since early 2015, partly because the overvalued exchange rate prompted Egyptians working abroad to use unofficial channels rather than the banking system to send money home.” The EIU notes that “the upturn in remittances in November reinforces our forecast that the current-account deficit will narrow in 2017, to US USD 13.8 bn from an estimated USD 16.4 bn in 2016, as the weaker EGP renders imports more expensive and simultaneously boosts the competitiveness of exports.”