Cairo – January 29, 2024: Subject to an exchange rate adjustment, Standard & Poor believes that the IMF could release the postponed tranches of its $3 billion loan to Egypt, projecting that a future devaluation of the Egyptian pound could place the LE more in line with the unofficial black market rate.
According to its report, S&P expects that the LE, which currently has an official exchange rate of LE 30.96 per USD, will be adjusted closer to the black market rate of LE 60. The report notes that the Egyptian pound is pressured by a sustained foreign currency shortage.
“We think more clarity on exchange rate policy would benefit trade and economic growth and trigger an increase in remittance inflows,” S&P wrote in its report.
As of 11 am on January 29, Egypt Today confirmed that the Egyptian pound was trading at 69-73 against the USD in the black market.
The report also mentioned the shortage’s impact on Egyptian banks, noting that it places additional pressure on banks’ funding profiles, and highlighted the recent restrictions applied on credit cards regarding foreign currency transactions.
S&P expects local banks' liquidity positions to continue to deteriorate.
The agency also pointed towards the declining traffic through the Suez Canal, caused by security concerns and rerouting of vessels due to Houthi attacks on international shipping in the Red Sea, as a contributing factor to the FX shortage.
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