Five months after Egypt devalued the pound, investors say policy makers would need to let it weaken further before they return, after pulling some $20 billion from the local debt market since the start of this year.
Yesterday, in a surprise development, Central Bank governor Tarek Amer resigned after an almost seven-year stint, leaving just a day before an interest-rate meeting. Though pressure built in recent days, the monetary authority has until now denied that a second wave of depreciation was even a possibility.
“They need to accept more currency weakness,” said Edwin Gutierrez, head of emerging-market sovereign debt at abrdn in London. “No one wants to enter with an incomplete FX adjustment.”
Egypt needs to win back the confidence of investors as energy and food shocks from Russia’s invasion of Ukraine strain its finances. With external capital markets all but closed, the government is seeking a new loan from the International Monetary Fund, which favors a more flexible exchange rate