Middle East & North Africa Economics

Middle East Economics Update

6 October, 2016

Egypt: devaluation needed for capital flows to pick up

Some analysts have argued that Egypt won’t devalue the pound until the country has a sustainable source of capital inflows, but we think this misses the point. The country is unlikely to experience a substantial pick-up in foreign investment until the currency has fallen. We think it may only be a matter of months before policymakers devalue the pound and ultimately the currency is likely to fall by around 25% against the US dollar, to 12/US$, by the end of next year.

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