Depreciation of the Egyptian Pound evidenced by contrasting share prices of International Commercial Bank in London and Cairo.

London-traded securities of Egypt’s largest listed bank point to expectations of another devaluation of the North African country’s currency.

CIB’s certificates of deposit trade on the London Stock Exchange at a 31% discount to its Cairo share price, the biggest difference since August 2016. “This reflects expectations that Egypt will allow its currency to depreciate again,” Hassan Malik said. strategist at Telemer in Dubai.

Egyptian dollar bonds recorded a new decline

He said: “The reluctance to move to a fully flexible currency means that another major devaluation of the pound is coming,” according to a report released by Bloomberg, which Al Arabiya has seen.net.

Fears that pent-up demand for dollars will not lessen without greater exchange rate flexibility and stronger investment flows have fueled speculation that Egypt may have to tolerate a fourth devaluation from March 2022. market than at the official rate. Banks and derivatives traders hedge the possibility of a sharp depreciation of the pound sterling.

In the non-deliverable futures market, the price of a 12-month contract fell to 41.6 per US dollar. The price of the pound sterling has fallen by about 50% since March last year and was trading at 30.9 in today’s trading on Wednesday.

In October, the government promised to move towards a more flexible exchange rate, allowing it to secure a $3 billion deal with the International Monetary Fund.

“Funding options in Egypt have been significantly reduced, and the transition to a flexible currency is likely to bring the official exchange rate closer to the parallel market rate, and this will need to be combined with additional interest rate increases to keep inflation in check. , which is a clever balancing act against already high inflation and low growth.”