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Egypt’s external risks underline need for weaker pound

Concerns over Egypt’s external position have grown due to the country’s wide current account deficit, rising short-term external debt and declining FX reserves. While some of the risks are mitigated by low rollover risks associated with Gulf deposits at Egypt’s central bank, a weaker currency is still needed. We think the pound will weaken by 20% to 24/$ by the end of next year.

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