Devaluation at last!

[newcastle]

In a surprise morning announcement, the Central Bank of Egypt announced that it has floated the Egyptian Pound against all foreign currencies.

Against the U.S. dollar, the Egyptian Pound was floated to EGP 13.10 per USD 1.00. Selling a U.S. Dollar, however, yields EGP 13.50.

The Egyptian Pound will be allowed to fluctuate (either positively or negatively) in value by 10 percent for a short period before it is set.

Also in an announcement, the Bank Misr and Al-Ahly announced that buying Egyptian Pound certificates will provide customers with an interest rate between 16 and 20 percent, depending on the duration that the certificates are kept.

This story is developing.

http://egyptianstreets.com/2016/11/03/c ... ian-pound/

[newcastle]

November 3, 2016 — 9:03 AM SAST Updated on November 3, 2016 — 9:55 AM SAST

Egypt took the unprecedented step of allowing its currency to trade freely as it announced a series of sweeping measures to stabilize the economy.
Among other changes announced by the central bank early Thursday was a 300 basis point increase to the key lending rates. Egypt’s currency crunch has crippled business activity and fueled shortages in key commodities, fanning discontent in a country already frustrated by higher taxes and faster inflation.
Egypt “announces its decision to move, with immediate effect, to a liberalized exchange rate regime in order to quell any distortions in the domestic foreign currency market,” the central bank said on its website.

The measures move Egypt closer to securing a $12 billion loan from the International Monetary Fund. The country’s woes are such that they have become an area of focus in global capitals. There’s shared concern that maintaining stability in Egypt is important, a U.S. Treasury official said last month on condition of anonymity. In Germany, government officials fear that any economic collapse could lead to a fresh wave of refugees.

The central bank set a tentative exchange rate of 13 pounds per dollar, plus or minus 10 percent, until it holds an auction at 1 p.m. local time. The currency will float freely after the sale, according to two bankers familiar with the decision. The pound has repeatedly dropped to records in the black market and depreciated to 17.98 per dollar in Bloomberg’s most recent survey of currency dealers.
The currency’s 12-month non-deliverable forwards plunged more than 10 percent to a record 16.6758 per dollar at 9:45 a.m. in Cairo.

‘Very Positive’
The exchange rate will now be set by “supply and demand,” Governor Tarek Amer said by phone early Thursday. In a statement on its website, the central bank said the measures would help end a black market in the Arab world’s most-populous country.
“We’ve been expecting this for a long time, and it is very positive,” Rami Sidani, head of frontier investments at Schroders Plc in Dubai, said by phone. “We expect a lot of interest in Egypt, it’s a massive economy that has been put on hold for years.”
The country has already secured $3 billion from Saudi Arabia and the United Arab Emirates and less than $1 billion from Group of Seven countries.
“Once you have a floating rate, this gap between the official and black market rates narrows pretty quickly, unless the government interferes, which it shouldn’t,” said Tariq Qaqish, the Dubai-based head of asset management at Al Mal Capital PSC. “Before we increase our exposure to Egyptian assets, we want to see that the entire process is seamless, like getting money into and out of the country.”

http://www.bloomberg.com/news/articles/ ... ur-economy

[newcastle]

Currently....11am....the banks in Hurghada are posting 16EGP to 1GBP (or thereabouts).

Not that that means they will actually buy or sell until there's more clarification.

Many don't have GBP to sell...and I suspect they'll hold on until Sunday (taking advantage of weekend closure) to let things settle.

[Brian Yare]

Currently....11am....the banks in Hurghada are posting 16EGP to 1GBP (or thereabouts).

Not that that means they will actually buy or sell until there's more clarification.

Many don't have GBP to sell...and I suspect they'll hold on until Sunday (taking advantage of weekend closure) to let things settle.

According to the BBC:

"Banks will be allowed to open their branches until 9pm and over the weekend to allow more transactions."

[Major Thom]

I remember A4 forecasting this months ago, remember A4 is a person in the know and can foresee most things that happen here. He knows the place back to front. Don't let us get too cock a hoop though there is no information on how they intend to control prices in shops. I see another rip off period in force very soon.
Think of the locals how will they afford things if there is no control, or will Government subsidies be brought back in to help them. It's not going to help those building at the moment, or those living in poverty. Has for tourist they will get more in exchange but it will still not effect spending power without price control.

[Brian Yare]

Only the National Bank of Egypt is giving live updates on-line.

At 21:00 live rates were

US$ 1 = EGP 15.75
EURO 1 = EGP 17.52
GB£ 1 = EGP 19.672

but these are changing, and their web-site is overwhelmed.

AlexBank last updated at about 12:20
Bank of Cairo updated at about 10:30

We live in interesting times, and I'm glad I did not convert from UK£ yesterday!

[Major Thom]

You can see what's going to happen, I am so pleased that when my license run out for my motorcycle, and I decided not to use it anymore, I stripped the tank off, took the injection system off and made it unusable. Every week I take a time and dated photo of it to prove it's unusable. Just in case. You know you have to be a few steps ahead here. It's going to be interesting when we go shopping tomorrow, looks like we will be al over Luxor, seeing whose selling at what price.

[Major Thom]

If fuel prices have gone up 46% that means all items of food and provisions will rise to cover the cost, and shops will also put on their percentage, they will only suffer by way of dropping sales.

[Major Thom]

For those In a position to do so will be more corrupt than ever in an attempt to increase their income. I predict theft will rise has people with no money will have no option but to steal to support their families. People will only want to sell and deal in hard currencies like Dollars and Euros. I appreciate that this had to come, but there now needs to be more control than ever. You really cannot blame the new Government too much, they had to take over a virtually bankrupt country, but the hardship to come will be horrendous. I bet the guy next door is beating himself up, he has just purchased a plot of land to build on, and his materials will virtually double overnight. Those Europeans that invested in business's now will have to rethink their positions, they have already seen a big drop, now they will have another. Will it be worth staying open? It's quite frightening really.
I hope the Egyptian people stay calm and realize this problem has been forced upon this Government by outside influences such as the IMF. They must also realize that previous Governments did not look after their Country, and filtered the Countries wealth off for their own benefit. Any more civil unrest will not be good for the Country and will only undermine the attempt to bring Egypt out of a quandary. I feel though that both the Police and Military are going to be run off their feet soon.

[Major Thom]

People will think great it will wok wonders for tourism, but it will not because prices will rise everywhere to accommodate the increases. So no change.

[Brian Yare]

Only the National Bank of Egypt is giving live updates on-line.

http://www.nbe.com.eg/en/Main.aspx

The rate seems unchanged over-night. So for the moment a Stella is approximately GB£1.00 on the WB.

[Major Thom]

i dont think it will change until new stocks that have been ordered arrive.

[A-Four]

Markets are closed in Egypt today, and the Central Bank of Egypt is offering a fixed rate on a broad band of buy/sell, however the London Money Market has just set the 11 a.m. fix, I think the general question here is,........Who is pulling the strings in Egypt, at this time ?

[Horus]

Who is pulling the strings in Egypt, at this time ?

Christine Madeleine Odette Lagarde

[Major Thom]

I think so Horus