On 10th October 2023, we informed our clients that the Egyptian Central Bank had instructed all banks to block all foreign transactions both at home and abroad. We stated categorically then that this was a sure sign of an impending devaluation of the Egyptian Pound and that they should prepare.
On 1st November 2023 we said “The Central Bank of Egypt will meet on 2nd November. We forecast that it will leave interest rates unchanged in order not to rock the markets ahead of December’s election. This decision will leave them some financial policy wiggle room,” when a much needed and overdue devaluation of EGP we predicted would occur. At that time interest rates stood at 21.25%. We told our clients again then that a float of the Egyptian Pound was 100% on the cards.
By 1st December 2023 we advised “USD1 on the parallel market at the time of writing will cost you anything from EGP50 to EGP56.” We pointed out that the spread between the official rate and the parallel one was by then almost big enough to cause a collective sigh of relief should the government pull the pin and float the currency. We also suggested then that the government was deliberately driving up black market rates to make any future bank rate look more attractive.
We were still positive that a devaluation was on the cards but we were also positive that we would not see it until the New Year, after the Presidential elections had been held.
Fast forward to 1st March 2024, President Sisi had retained his office in the election and we said this, “Black markets rates have dropped from EGP70+ down to EGP 51 to USD1… Given the current parallel market rates we anticipate, once floated it will settle at [between] EGP45 to 50 for USD1.” We said the float would happen within a “matter of weeks”.
At that time USD1 bought you EGP30.89.
On 7th March 2024 the currency was finally set free. At points on that day EGP traded at over 50 to the Greenback before finally settling in the high 40’s. On the same day the Central Bank announced a 6% increase in interest rates too. As of May 2024, USD1 bought EGP48.51 and interest rates were 27.25%. By notifying our clients five months before this occurred, we enabled them to sell their EGP prior to the devaluation, converting the value into hard currency storage.
