Potential devaluation of pound causes EGX30 to rise to highest rate in 4 months

Daily News Egypt
2 Min Read
The Egyptian stock market indices continued to drop for the fourth consecutive day, reportedly affected by the Greek economic crisis, the drop in China’s capital market and domestic fears of militant attacks. (DNE File / Mohamed Omar)

In the Egyptian Exchange’s (EGX) first trading sessions of the week, the EGX 30 rose by 4.7% to register 7,517 points, a record high over the past four months. This increase comes on the back of recent remarks by Governor of the Central Bank of Egypt (CBE) Tarek Amer about possible further devaluation of the Egyptian pound against the US dollar.

The index for small- and medium-sized shares, EGX 70, also rose by 1.95% and the EGX 100 rose by 2.12%.

The transactions of Egyptians and Arabs were net buyers, while non-Arab foreign investors were net sellers.

Last Sunday, Amer described the CBE’s policy of maintaining the value of the pound as a “big mistake”. He indicated the possibility of a more flexible policy that may again cut the value of the pound in the coming period.

The trend of institutions to strongly purchase on Sunday was influenced by Amer’s statements, Investment Manager at HC Securities Mohamed Nabarawy said. The recovery of global markets and the US market is reaching very high levels in the recent period.

Nabarawy expressed his fear of a reverse reaction by the market if the CBE devaluates the pound—especially after the strong hikes in the Monday session last week and that of this Sunday—due to the nature of traders on the Egyptian market.

He noted that the recent development regarding obtaining a loan from the International Monetary Fund (IMF) will contribute to keeping the market intact on Monday should the CBE keep the pound stable.

Head of research at Beltone Financial Holding Hany Genena said that recent remarks made by Amer were in favour of the stock market. He predicted a significant rise on the EGX if the pound is devaluated to an expected rate of between EGP 10.50 and EGP 11 against the dollar.

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