Al-Marsad newspaper: Analysts at the American investment bank “JP Morgan” expected that there would be a need for a significant devaluation of the Egyptian pound, and that Egypt’s public finances would suffer.
Analysts said – according to “Archyde.com”: “We expect that there will likely be a need now to depreciate the exchange rate,” estimating that the Egyptian pound is currently overvalued by more than 15%.
The US bank put forward several scenarios, the first is not to devalue the currency, and a scenario similar to the period 2014-2015 when the authorities allowed the currency to depreciate about 5%, and the third is a larger devaluation under a new program with the IMF.
This scenario analysis resulted in a potential downside weighted 8.5% from the current rate against the US dollar; He added that his target price is to drop the currency to 17.25 pounds to the dollar.
Refinitiv data indicate that the price of the Egyptian currency recently reached 15.72 pounds to the dollar, about 10% lower than the target price of JPMorgan.
Because of the war in Ukraine, Egypt faces higher costs due to its dire need to import wheat, in addition to losing revenue from tourism from Russian and Ukrainian visitors to the Red Sea resorts.