Cairo – Mubasher: The IMF Managing Director Christine Lagarde's statement over Egypt's three-year loan indicates that the Central Bank of Egypt will float the pound (EGP) by the end of October, according to a report by Prime Research on Sunday.
“There are several prior actions which need to be completed before the board can actually meet…To my knowledge, these prior actions are almost completed -not quite - in relation to both exchange rate and in relation to subsidies, there is still a little bit of implementation to be made before the board can meet," said Lagarde on Saturday.
The firm also noted two other indicators revealing the timing of flotation, according to the report.
First, the government is further trying to buy 500,000 tons of rice and 400,000 tons of sugar to secure its strategic reserves for six months, the research agency noted.
This move is considered another indicator of a possible devaluation as the government is trying to control commodity prices to avoid any protests against high prices during the post-devaluation period, the research firm added.
Second, the $5-6 billion finance receivables from Saudi Arabia and China by mid-October may be followed by the speculated decision by the end of this month.
In this context, Pharos Research projected a theoretical fair value of the Pound versus the Dollar at EGP 11.75 and the official exchange rate would move to EGP 11.50-11.99/USD, using interest rate parity.
"The toughest part of reform implementation…will be securing public acceptance of the imminent reform agenda", Pharos concluded.
