December 17, 2019 / 3:16 PM / a month ago

UPDATE 1-Egyptian pound breaks through 16 per dollar, first time since Feb 2017

(Adds analysts’ comments)

CAIRO, Dec 17 (Reuters) - The Egyptian pound extended the robust gains it has made against the dollar in 2019, trading stronger than 16.00 pounds to the greenback for the first time since February 2017.

The Egyptian currency closed at 15.99 against the dollar on Monday and strengthened marginally to 15.98 on Tuesday. It has appreciated around 10.5% against the dollar since Jan. 1.

The pound last traded stronger than 16.00 to the dollar on Feb. 28, 2017, when if firmed to 15.79.

Ahmed Hafez, Renaissance Capital’s head of research for the Middle East and North Africa, said a stronger pound could reduce foreign purchases of Egyptian treasuries, predicting the currency may weaken next year.

“We think lower interest rates mean we should see less fixed income portfolio money coming to Egypt in 2020,” he said.

“Given the current account deficit, we assume modest nominal depreciation of the EGP, which is already trading at a premium to its long-term average REER (real effective exchange rate).”

Allen Sandeep, head of research at Naeem Brokerage, expected a stronger pound in the first quarter of 2020, however.

“We expect it to touch 15.75 by Q1 2020,” he said. “That’s our internal calculation, which is still preliminary.” (Reporting by Yousef Saba; Editing by Jon Boyle, Patrick Werr and Alex Richardson)

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