Egypt Pound Plunges in Third Devaluation in Less Than Year

The Egyptian pound plunged to a record low on Wednesday as authorities navigate the country’s worst foreign-exchange crunch in half a decade, Bloomberg News reported. The currency headed for its biggest slump since a devaluation in October with a slide of as much as 7% to about 26.5 per dollar in the offshore market, before trimming some losses, according to data compiled by Bloomberg. That still leaves the pound stronger than prices offered in the black market. “This is certainly another devaluation,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “It stems from the wide differential from the official and parallel market rate, which has added to the tightness and shortage in FX liquidity.” Egypt allowed its currency to weaken twice in 2022, eventually clinching a $3 billion loan from the International Monetary Fund thanks to a pledge in October to adopt a flexible exchange-rate policy. The North African nation is one of the world’s largest wheat importers and it has grappled with the economic fallout of Russia’s invasion of Ukraine that’s touched off inflation. Egypt dollar bonds led gains among emerging-market sovereign bond peers on Wednesday after the pound weakened, cementing expectations that authorities will comply with IMF requirements. Notes due in 2061 rose as much as 2.5 cents to 65 cents, the highest since August, according to indicative pricing data collected by Bloomberg. Read more.