ALBAWABA – Economists expect the central bank to pin current Egypt interest rates and put off any further rate hikes until the bank builds up its foreign currency buffers enough to manage another currency devaluation, Bloomberg reported Thursday.
The government is currently trying to raise billions in hard currency from the sale of government stakes in state-owned companies.
Goldman Sachs Group Inc. estimated that the central bank would need in excess of $5 billion to “enable the orderly transition to a unified, market-clearing exchange rate,” according to Bloomberg.
Derivatives traders, in the meantime, are betting that the monetary authorities would let the Egyptian pound fall in the coming months.
However, all but three economists in a Bloomberg survey of 15 forecasters expect the benchmark to stay at 18.25 percent for a second consecutive month.
“Both foreign-exchange and interest-rate adjustments will likely be postponed until after more substantial asset sales materialize,” said Carla Slim, an economist at Standard Chartered Plc.
The central bank of Egypt raised interest rates by 10 percent since March 2022, and allowed the pound to halve in value over three separate devaluations.
Egypt’s economic and monetary policies comprise a shift to what authorities called a “durably flexible” exchange-rate regime. The shift also helped Egypt secure a $3 billion International Monetary Fund deal last year.
