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(Bloomberg) — Egyptian billionaire Naguib Sawiris criticized delays in enacting a long-awaited devaluation of the pound, suggesting authorities match the spiraling black market rate to end the nation’s chronic foreign-currency shortage.
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Postponing reforms is “a crisis that will increase the scale of the critical scenario we find ourselves in,” Sawiris said in a message in Arabic on social media platform X. The Egyptian pound has recently plummeted on the parallel market to 68-70 per dollar. days, which is a decrease of more than 50% from the official rate of around 30. 9.
“The right way is to start with the black market exchange rate and then gradually work your way down, so that everyone is okay with promoting their dollars through official channels if the two rates are the same,” Sawiris said.
Most analysts expect Egypt to present what would be its fourth devaluation since the beginning of 2022 in the first quarter of this year. But Sawiris, who ranks seventh among Africa’s richest users according to the Bloomberg Billionaires Index, warned that Egypt needed more than incremental changes to the crisis.
“Any attempt to solve the dual exchange rate challenge by providing the dollar at a lower price than the black market will be successful,” Sawiris said.
The past circular of devaluations has already halved the value of the pound, damn businesses and consumers in the Middle East’s most populous country. Another move would fuel a painful new rise in inflation, which has recently begun to cool after hitting a record high of 38% in the mid-term. -2023.
To hedge themselves against the devaluation-inflation spiral in the country, local investors have been flocking to the stock market. The benchmark EGX30 index rose more than 18% in January in dollar terms, making it the world’s third best-performing stock exchange, after Argentina and Nigeria. Derivative traders have meanwhile been ramping up their bets on a devaluation through short-term non-deliverable forwards.
Sawiris, who owns stakes in gold mines through La Mancha Resources, is known for sharing heartfelt reviews with his 8. 3 million followers on X. Still, his comments mark a relatively rare intervention in his component on currency, one of Egypt’s economic themes.
Egypt received a $3 billion bailout from the International Monetary Fund more than a year ago. But the Washington-based lender has delayed two revisions to the deal, waiting for the government to allow a more flexible exchange rate and put other promised reforms into effect. before handing over more funds.
–With that of Kerim Karakaya.
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