Egypt’s pound could be pressured as economy slows

The Egyptian pound could come under pressure as Egypt’s economy slows, the country’s prime minister said on Monday.“We haven’t seen the currency depreciate so far but I believe that yes it could happen,” Ahmed Nazif said at an economic conference in Cairo. “You will see that pressure happening but so what?”

He did not give further details.

Banks including Beltone Financial and EFG-Hermes have said they expect the Egyptian pound to weaken against the U.S. dollar as the Egyptian economy cools.

Egypt’s pound has fallen about 1 percent this year against the dollar.

Egypt’s Finance Minister Youssef Boutros-Ghali said earlier this month that the country was facing the threat of a serious contraction as the global financial crisis hits tourism, investment and the Suez Canal.

On Friday, the Egyptian central bank announced it had slashed its key overnight interbank rates by 100 basis points and said it would act to support economic growth provided that would not conflict with price stability.

Nazif also said Egypt will continue its efforts to deregulate sectors in the economy despite the global financial crisis.

“Deregulation I think is a must during a reform programme,” Nazif said. “Two sectors that I believe are ready and have taken steps in this direction are energy and transport”.

He said the government was discussing ways to restructure its energy agencies.

“We will be taking active steps to clearly define the role of the private sector vis-a-vis the government in a way that will allow more competitiveness and more transparency,” he said, without giving details.

Egypt has liberalised its economy since a new government took office in 2004, cutting tariffs and taxes and selling state-owned enterprises.

The country has sold a new mobile telephone licence and had planned to sell a second fixed-line licence.


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