Egypt

Egypt’s central bank devalued its currency and said it would adopt a more flexible exchange-rate policy as it seeks to ease an acute dollar shortage that is hurting the economy, sending local stocks sharply higher, The Wall Street Journal reported. The Central Bank of Egypt on Monday sold almost $200 million in an interbank auction at 8.85 Egyptian pounds per dollar, compared with the previous rate of 7.73 that it maintained for nearly five months. The move will help narrow the gap between the pound’s exchange rate of about 9.6 to the dollar last week in the black market.

After two weeks of negotiations over a possible $4.8bn loan deal to prop up Egypt’s flailing economy, an IMF team will probably return on Tuesday without a deal to Washington, where talks are likely to proceed, officials and diplomats said, the Financial Times reported. Hisham Qandil, Egyptian prime minister, told Bloomberg News that negotiations over terms of the loan may continue on the sidelines of the IMF’s spring conference in Washington.

Egypt needs IMF money to stay afloat, but the international lender is demanding tough subsidy cuts from an already-embattled government, The Christian Science Monitor reported. President Mohamed Morsi is facing decision time on a national financial crisis that dwarfs the one Sadat faced 35 years ago. President Morsi's government recently announced a rationing plan for subsidized bread that it claims won't affect the poor.

Egypt may qualify for an International Monetary Fund bridge loan of more than $700 million a year that could help Cairo stave off collapse of its crisis-stricken economy, an IMF official said on Monday, The Wall Street Journal reported. "Egypt needs bold and ambitious policy actions to address its economic and financial challenges without further delay," IMF spokeswoman Wafa Amr said.

Egypt is at risk of a "revolution of the hungry" two years after Hosni Mubarak was ousted in a popular uprising, as food and energy prices will soar with or without an IMF deal, Reuters reported in an analysis. Failure to get the $4.8 billion (£3.17 billion) loan or some other funding would have dire consequences: if Egypt keeps burning foreign currency at the rate it has done since the 2011 uprising, it will have none left in little more than a year. But success would also stir Egypt's boiling social and political cauldron.

Egypt seems to realise the money has nearly run out and it must turn to the IMF or a willing friend in the Gulf, where it now has just one, Qatar, Reuters reported. After months of delays, the Islamist government has produced a new plan to reverse a slide in its foreign currency reserves and tackle a budget deficit that could overwhelm a stable wealthy nation, let alone a country riven by political conflict. This plan relies on someone else stumping up to keep the Arab world's most populous nation afloat.

The key to preventing a messy devaluation of Egypt's pound may lie with the country's households, whose dollar holdings are being eyed by foreign investors as a critical gauge of trust in the authorities, Reuters reported in an analysis. Countless emerging market crises have shown over the decades that it is not the withdrawal of foreign investors from a market but the flight of local households and businesses from a currency that is instrumental in its collapse. Egypt, despite months of upheaval, is not there yet.

Egypt's currency plumbed new depths yesterday as policy makers tried to reassure the public and investors that they can prevent a full-scale currency devaluation while still repairing Egypt's budget deficit, the Wall Street Journal reported today. The country's worsening economic crisis comes after President Mohammed Morsi isolated his political opponents to push through Egypt's Islamist-leaning constitution, sparking weeks of riots, protests and political uncertainty.

Egypt's new government hopes to secure a $4.8 billion loan from the International Monetary Fund before the end of the year, government officials said, in a fresh effort to heal the country's ailing economy, The Wall Street Journal reported. At a news conference on Wednesday following meetings with President Mohammed Morsi and his senior economic team, Christine Lagarde, the IMF's managing director, said the global lender would return to stalled negotiations.

The International Monetary Fund agreed Sunday to lend Egypt $3 billion with few stated conditions to help the country mend its ailing economy, The Wall Street Journal reported. Egypt's finance minister, Samir Radwan, and the deputy director of the IMF's Middle East and Central Asia Department, Ratna Sahay, at a news conference announced a 1.5% interest rate on the one-year loan, which is to be paid in full within five years.