CBE Expected To Allow Further Devaluation Of Egyptian Pound: HSBC
Further devaluation of Egyptian pound is expected during 2015 and 2016, according to a report issued by HSBC.
This will see rates of the currency versus the US dollar reaching EGP 7.50 by the end of 2015 and EGP 8 by the end of 2016.
According to the Central Bank of Egypt (CBE), the dollar buying price is EGP 7.15 while the selling price is EGP 7.17. The prices on the black market have already surpassed HSBC’s expectations. Selling dollar price ranges between EGP 7.50 to EGP 7.59 while the buying price varies between EGP 7.60 to EGP 7.62.
The report mentioned that the international foreign reserves’ stability is mainly due to the support Egypt received from the GCC, which pledged $12bn financial aid to Egypt following the ouster of former President Mohamed Morsi.
Discussing the developments on the Egyptian equity market, HSBC’s report highlighted that despite the improvement witnessed in the market’s performance, investors remained concerned.
Investors concerns are a result of the repatriating US Dollar funds and the government’s announcement of the 10% capital gains tax. The third concern was due to the investors’ feeling that “companies remain vulnerable to government moves to address broader and more significant problems in the country”.
The bank is expecting the government to make some announcements that will affect the businesses sector during 2015.
The report added, however, that the settlement of the legal disputes between the government and several international companies such as Al-Futtaim and Orascom Construction Industries (OCI).
Earlier last month, Al-Futtaim settled its dispute with the New Urban Communities Authority (NUCA), agreeing to pay EGP 214m within 90 days to register the land ownership and receive building permits.
Hani Sarie-Eldin, Al-Futtaim Group’s lawyer, said the agreement on the final settlement is currently under review by the State Lawsuits Authority (SLA). The Egyptian constitution requires that the government refer all dispute agreements to the State Lawsuit Authority for review. Sarie-Eldin expects that the STA will approve the settlement.
Sarie-Eldin said: “It was agreed to extend project implementation for five years, beginning once the SLA completes its review of the settlement.”
The process of obtaining licences for the group has been delayed since 2009 Sarie-Eldin said, “costing Egypt between EGP10-11bn in investments”.
Al-Futtaim invested EGP 7bn into Egypt under a pre-2009 licence between 2011 and 2014, out of EGP22bn in investments that were planned to be supplied by the end of 2015.
On 4 November, the Egyptian Tax Authority’s Independent Appeals Committee ruled in favour of OCI NV’s subsidiary in Egypt OCI SAE.
The construction company announced that it will commence studies to construct and develop a coal-fired power plant in cooperation with UAE-based International Petroleum Investment Company (IPIC). The investment in the project is expected to reach $3.5bn.
Nassef Sawiris told the Daily News Egypt that the company is currently “evaluating several potential investments that are on par with the size and importance of the announced coal-fired power plant with IPIC and will make additional announcements in due course”.
The report stated that the government’s plan to repay the outstanding debt to foreign partners, amounting $4.9bn within six months.
Source: Daily News Egypt
