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Wednesday, 29 May 2019

Lighthouse Research says EGP still pegged

The EGP is still “tightly managed” and will continue to appreciate, Dubai-based Lighthouse Research said in a note (pdf). The firm said the appreciation of the EGP against key currencies since the start of the year “defied the broader sell-off in global emerging market assets.” It pointed out that the KRW, ZAR and TRY have depreciated by 6%, 4% and 15% respectively. The Egyptian pound was selling at 16.8794 to the USD on Tuesday, having broken through the psychologically important EGP 17 barrier.

It’s not about foreign reserves, Lighthouse argues, pointing out that most inflows took place from November 2016 until February 2018 before a stagnation that has seen the figure only go up by USD 1.7 bn since. The current account deficit has seen some improvement though, thanks to higher exports and a recovery in the tourism industry, the firm notes.

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