EGP closes at record low against the greenback
EGP WATCH- The EGP is officially the cheapest it’s ever been (against the USD, anyway): The EGP closed at a record low against the greenback yesterday, breaking past the December 2016 low seen in the wake of what was (at the time) an historic float. The EGP fell an additional two piasters yesterday to 19.5784 against the USD, breaching the record low 19.5605 low set five years ago. The EGP has lost 24.1% of its value against the USD since the devaluation in March.
It’s the story of a weak EGP — and a strong USD. While the EGP has slid against the greenback, it has appreciated 17% against the GBP, 13% against the JPY and 8% against the EUR since March as currencies around the world lost ground to the USD.
It was just a matter of time: Under the leadership of Hassan Abdalla, the central bank has been allowing the EGP to drop steadily against the greenback: The currency has eased almost 2% since 18 August, when he replaced Tarek Amer as governor.
Enterprise readers see the EGP dropping to 22.12. That’s the average figure the Enterprise Fall 2022 Reader Survey says we’re using to put together our 2023 budgets. 22% of respondents to our reader poll say they’re budgeting with the EGP in the 22-23 band and the same number of participants say they figure the greenback will be changing hands at EGP 23-24 next year. A recent Goldman Sachs report says folks they spoke with in Cairo see the EGP in the 22-24 band, while BNP Paribas forecast before last week’s CBE policy meeting that the currency would fall to 22-23 by the end of the year. Forward markets have priced in similar declines.
Do we continue a gradual decline or will securing an IMF loan require a dose of shock therapy? That’s the mn-USD question right now. With talks on a facility now widely believed to be in the final stages, we hope not to have to wait too long to find out.