The US investment bank, Goldman Sachs, expects that the Egyptian pound may rebound in early 2025 against the dollar, with a series of seasonal external portfolio flows declining.
The bank added in a report reported by Bloomberg that this decline indicates greater flexibility in the Egyptian pound, which has witnessed long periods of stability after the authorities imposed in March the fourth reduction in its value since early 2022.
Farouk Soussa, Goldman Sachs’s economist for the Middle East and North Africa, said that the reason behind the pound’s decline this December was in the redemptions of short-term treasury bonds, which were issued earlier this year, as investors chose to take profits at the end of the year.
Sousse added that this leads to “lower rates of renewal of positions,” especially since the Ministry of Finance has until recently resisted raising proceeds at auction in order to keep the cost of borrowing low.
Sousse continued: But with the possibility that the Central Bank of Egypt will begin reducing high interest rates in the first quarter of 2025, it is expected “to issue more bonds, including long-term treasury bonds.”
Sousse said this would give investors an opportunity to re-enter the local market, which would support the Egyptian pound.
Sousse added that the performance of the Egyptian pound is subject to careful monitoring by investors seeking to achieve high returns, and by the International Monetary Fund, which wants the currency to accurately reflect supply and demand.
