The Egyptian pound is declining very quickly for this level

The Egyptian currency fell to a seven-month low of 16.23 to the dollar on Thursday, which is the fifth consecutive day of its decline after two months of trading almost unchanged.

The Egyptian pound, which compensated for some of its losses later in the trading session, fell 2.2% against the US currency since the beginning of the week, the largest weekly decline since March 2017.

And emerging market assets are under pressure around the world, as investors abandoned the most risky assets after the repercussions of the Corona virus pandemic swept the global markets.

Egypt is negotiating a support package from the International Monetary Fund under the credit preparedness agreement. Economists expect the International Monetary Fund will look at the very least a moderate devaluation.

James Swanston of Capital Economics said that the deviation of the Egyptian pound is far from the level of 15.7 against the dollar, which has remained in it for most of the past few months, indicating that the Egyptian Central Bank has begun to loosen its grip on the currency.

“But as global risk appetite improves, it is likely that policymakers are feeling more comfortable now in allowing the currency to fall, and we expect it to drop further in the coming months,” he added.

Analyst at Renaissance Capital Ahmed Hafez, who expects the pound to drop to 17 against the dollar by the end of the year, said the move was not surprising, but “it is a little faster than we expected.”

It was not immediately possible to contact the Central Bank for comment.

The Corona virus pandemic has affected some of the largest foreign exchange resources for Egypt in the last three months, especially tourism, which accounts for about 5% of gross domestic product, and transfers from Egyptians working abroad. It also caused massive foreign currency displacements from domestic debt markets.

The Egyptian currency has declined only slightly since the beginning of the year. This contrasts sharply with other emerging market currencies, which have been affected by the crisis, with the Brazilian real falling by about 20% in 2020.

The Minister of Planning said last month that the credit readiness agreement would help Egypt implement structural reforms that would help remove barriers to private business.

The International Monetary Fund last month approved a $ 2.77 billion package through its rapid-financing tool to help Egypt reduce its balance of payments gap.

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