Investors have lost even more confidence in Egypt over the past month. The equity market has tumbled and, while this could in part be related to signals by the US Fed that it will begin to taper QE3 later this year, we think local factors are playing a bigger role. Large protests are planned for the end of the month and an IMF deal still seems far away. As a result, there’s little prospect of a let-up in strains on Egypt’s balance of payments. In the meantime, the economy remains extremely weak.
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