Today’s decision to keep the benchmark rate unchanged at 9.25% in a sign that Egypt’s central bank is increasingly confident that loans from the IMF and elsewhere will materialise soon. Indeed, the recent stock market rally (which is in part due to foreign investors), low inflation and the stability of the pound are likely to have played a role in the decision too. However, we don’t think that the risks of a balance of payments crisis and currency devaluation are behind us yet.
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