Egypt

Under Cairo’s baking summer sun, a forecourt of heavily discounted new Toyotas showcases a surprising side-effect of March’s dramatic currency devaluation: prices for big-ticket items are tumbling, Bloomberg News reported. They’ve fallen so much, in fact, that would-be buyers of everything from sofas to refrigerators and automobiles are holding off, convinced they can wait for a better deal. Almost no one is splashing out — and that’s an issue Egypt’s consumer-led economy needs to overcome.

Egypt kept interest rates at an all-time high for a second consecutive meeting, looking to ensure a slowdown in inflation continues after a dramatic currency devaluation, Bloomberg News reported. The central bank maintained the benchmark deposit rate at 27.25% and the lending rate at 28.25%, its Monetary Policy Committee said Thursday in a statement. “The Committee judges that the current monetary stance is appropriate to support the sustained moderation of inflation, and will continue to assess its transmission to the economy in a data-driven manner,” it said in the statement.

The Suez Canal's annual revenue dropped by almost a quarter in its latest financial year as some shippers switched to alternative routes to avoid attacks by Iran-aligned Houthis in the Red Sea, Reuters reported. Osama Rabie, the head of the Egyptian canal's authority said on Thursday revenues fell to $7.2 billion in its 2023-24 financial year from $9.4 billion the year before. Since November, the Houthis have been attacking commercial vessels in the Red Sea and Indian Ocean to show support for Palestinian militant group Hamas in its fight against Israel.

Egyptian inflation decelerated to the slowest pace in a year and a half, even after a steep currency devaluation and a historic move to raise the cost of subsidized bread, Bloomberg News reported. Consumer prices in urban parts of the North African country grew an annual 28.1% in May, compared with 32.5% the previous month, state statistics agency CAPMAS said Monday. That was lower than forecast by economists at Goldman Sachs Group Inc., EFG Hermes and Naeem Brokerage.

A key index of activity in Egypt’s non-oil economy climbed to its highest level in almost three years, finally approaching growth territory as inflation cooled and foreign currency became more available after a steep devaluation, Bloomberg News reported. The Purchasing Managers’ Index compiled by S&P Global, which measures the performance of the private sector, rose to 49.6 in May from 47.4 the month before. Though still below the 50 mark that separates expansion from decline, it’s at the highest since August 2021, according to a report published Tuesday.

Egypt’s credit rating outlook was raised to positive from stable by Fitch Ratings, after the North African nation secured an international bailout of $57 billion for its cash-strapped economy, Bloomberg News reported. Fitch affirmed Egypt’s B- rating, leaving it six notches below investment grade. It also came weeks after authorities agreed to a landmark $35 billion investment deal with the United Arab Emirates and additional support from the International Monetary Fund and the World Bank.

The executive board of the International Monetary Fund confirmed a deal with Egypt to increase its bailout loan from $3 billion to $8 billion, in a move that is meant to shore up the Arab country’s economy which is hit by a staggering shortage of foreign currency and soaring inflation, the Associated Press reported. In a statement late Friday, the board said its decision would enable Egypt to immediately receive about $820 million as part of the deal which was announced earlier this month.

The World Bank is set to provide Egypt with over $6 billion, boosting the global bailout for the North African nation’s struggling economy to more than $50 billion in the past few weeks, Bloomberg News reported. The Washington, D.C.-based institution said Monday the financing covers the coming three years, with half aimed at government support and the remainder to buoy a private sector seen as key to medium and long-term sustainable economic growth. The announcement came a day after the European Union pledged about $8 billion in aid, loans and grants.

Egypt struck a deal with the International Monetary Fund to extend the country an $8 billion loan, hours after allowing its currency to float freely and raising interest rates in a surprise bid to win back foreign investors as its economy comes under pressure from the war in Gaza, the Wall Street Journal reported. The Egyptian pound lost about 38% of its value against the U.S. dollar after the currency announcement, despite the Central Bank of Egypt raising key interest rates. The pound last traded at 49 pounds to one U.S. dollar, from about 30 the previous day.

Egypt is mired in a grueling economic crisis that’s left its 105 million-plus people gripped by uncertainty, but one thing seems all but assured: another currency devaluation is likely on the way, according to a Bloomberg commentary. The anticipated move would be the fourth major round of weakening for the Egyptian pound since early 2022 — and potentially the largest yet. Done correctly, it could help bring closer to an end the nation’s worst hard-currency crunch in decades, drawing foreign capital to the $400 billion economy and pulling it back from the brink.