Macroeconomic Forecast Egypt

We see little reason to change our long-held bearish outlook on the Egyptian pound at present. Trading at EGP5.9630/US$ on September 20, fundamental pressures on the unit remain firmly to the downside. A growing current account deficit, elevated inflation, and a burgeoning budget deficit being financed primarily through the issuance of domestic debt, all underpin our view that the currency is set to weaken further. We project the pound averaging EGP5.9500/US$ in 2011.

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