Egypt’s pound may drop to a record low this year as economic growth slows the most in almost two decades, prompting foreign investors to snub local-currency debt and pushing up the government’s borrowing costs.
The currency, which fell to a six-year low of 5.9758 against the dollar on March 30, may drop to 6.3 by the end of this year, according to the median of five estimates compiled by Bloomberg this month. That’s a depreciation of 5.5 percent from today’s spot rate of 5.9543 at 3:53 p.m. in Cairo. Egypt raised 1.5 billion Egyptian pounds ($252 million) from the sale of one- year treasury bills at an auction today, less than its target 3.5 billion pounds as the yields climbed to 12.79 percent to the highest since November 2008.
The rising borrowing costs and a budget deficit the government expects to widen to a six-year high have prompted Finance Minister Samir Radwan to turn to the International Monetary Fund and the World Bank for as much as $6.2 billion of loans. The Finance Ministry, facing an economy that shrank 7 percent last quarter after a revolt that toppled President Hosni Mubarak, is stepping up sales of fixed-income securities to local banks.
No comments:
Post a Comment