Egypt’s elections add to vulnerabilities

Early results from the first round of Egypt’s presidential election appear to have polarised society, pitting Islamists against secularists, and revolutionaries against the old guard. The outcome remains highly uncertain, but the key point is that while Egypt is engulfed by political troubles, economic vulnerabilities are building. Crucially, Egypt has now burnt through most of its FX reserves, which had helped to avoid a currency crisis over the past year or so. Unsurprisingly, the markets have reacted unfavourably to recent events.