DUBAI Oct 3 Egypt's stock market rose sharply
in early trade on Monday on hopes that an international
financing package for the country would be finalised soon after
this week's annual meetings of the International Monetary Fund
and World Bank Group.
The Egyptian stock index climbed 2.8 percent in a
broad rally, with investment bank EFG Hermes rising
Egypt has reached a staff-level agreement for a $12 billion
loan programme from the IMF and must secure around $6 billion in
bilateral financing to obtain final approval for the programme.
It has been in talks with China for $2 billion, while Saudi
Arabia and other rich Gulf states may also provide money.
Officials attending the Washington meetings could finalise
the bilateral financing, and Arqaam Capital said in a report
that the IMF's board might then give final approval to its
programme as soon as in the following week.
It said that at the same time, Egypt might also take another
major step to attract foreign fund inflows and resolve an
endemic hard currency shortage: an aggressive devaluation of the
Egyptian pound, perhaps to 12 against the U.S. dollar or
beyond compared with its current official rate of 8.88.
The central bank could move to a new, hybrid foreign
exchange system combining characteristics of managed and free
floats, while hiking interest rates by between 1 and 3
percentage points to ensure market stability, Arqaam said.
(Reporting by Andrew Torchia; editing by Susan Thomas)