{"id":549869,"date":"2022-10-04T03:53:09","date_gmt":"2022-10-04T03:53:09","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/10\/04\/this-morning-its-like-imf-talks-are-buffering-at-99-9-complete\/"},"modified":"2022-10-04T03:53:09","modified_gmt":"2022-10-04T03:53:09","slug":"this-morning-its-like-imf-talks-are-buffering-at-99-9-complete","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/10\/04\/this-morning-its-like-imf-talks-are-buffering-at-99-9-complete\/","title":{"rendered":"THIS MORNING: It\u2019s like IMF talks are buffering at 99.9% complete"},"content":{"rendered":"

Good morning folks, and welcome to hump day. <\/strong>The upcoming 6 October holiday technically means we\u2019re already over the hump and sliding into the last long weekend of the year.<\/p>\n

<\/a> THE BIG STORY HERE AT HOME- Talks with the IMF are really, nearly <\/strong>(almost) (but not <\/strong>quite) done: <\/strong>The International Monetary Fund should reach staff-level agreements on loans to Egypt and Tunisia \u201cwithin days or weeks, hard to predict but it will be very soon,\" IMF Managing Director Kristalina Georgieva told Reuters<\/a> yesterday during a visit to Riyadh.<\/p>\n

A \u201csizeable\u201d package: <\/strong>Georgieva demurred on just how big the loan from the multilateral lender will be, saying only that the programs with Egypt and Tunisia are \u201csizeable\u201d and will be set at the very end of negotiations. Only time will tell whether \u201csizeable\u201d turns out to be in the USD 3-5 bn range that BNP Paribas has penciled in, or closer to the USD 15 bn Goldman Sachs has suggested (an estimate that officials including Finance Minister Mohamed Maait have said is too large<\/a>).<\/p>\n

For those of you keeping score at home: <\/strong>Egypt has been in negotiations with the IMF since March<\/a> in a bid to secure financial assistance following the economic shocks brought on by Russia\u2019s war in Ukraine and rising interest rates in advanced economies. Policymakers have kept us on the edge of our seats, with talks said to be in the \u201cfinal stages\u201d<\/a> or wrapping up \u201csoon<\/a>\u201d for weeks now.<\/p>\n

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EGP WATCH- Yesterday marked a fresh low for the EGP against the soaring <\/strong>greenback. <\/strong>The EGP fell as much as 10 piasters yesterday, closing the day at 19.6683 against the greenback. That marks a new record low against the rising US currency.<\/p>\n

The EGP has lost 24.8% of its value against the USD this year<\/strong>, including the sudden 15.9% devaluation in March and the slow slide the central bank has allowed since then. Yesterday saw the quickest weakening of the EGP in four months, according to Reuters<\/a>. The currency last week breached the record low<\/a> of 19.5605 set five years ago on the back of the historic 2016 float.<\/p>\n

Y\u2019all think the EGP has further to slide: <\/strong>Enterprise readers see the EGP dropping to 22.12 on average, according to our Fall 2022 Reader Survey<\/a>. Goldman Sachs sees the EGP settling in the 22-24 band, while BNP Paribas is forecasting the currency to fall to 22-23 by the end of the year.<\/p>\n

The USD is on a tear: <\/strong>The US Federal Reserve\u2019s tightening cycle and a wave of risk-off sentiment in global markets has sent the USD on a strong rally in recent weeks and months. That has seen the EGP strengthen against the GBP, JPY and EUR as the three big currencies have lost ground against the greenback.<\/p>\n

Currency defenders, assemble? <\/strong>Speculation is rising that major central banks could launch coordinated action to defend their currencies against the greenback, which has surged to two-decade highs this year, Bloomberg<\/a> reports, citing the latest MLIV Pulse survey. Around 45% of the 795 respondents expect countries to begin working together to tackle USD strength, which is putting increasing amounts of stress on weaker economies and commodity importers which have been hit by the economic impact of the war in Ukraine.<\/p>\n

China is first mover: <\/strong>The Chinese central bank has instructed state-owned banks to have offshore branches prepared to sell USD and buy CNY as it intervenes to prevent further depreciation of its currency, which has fallen to its lowest level against the greenback since 2008<\/a>. (Reuters<\/a>)<\/p>\n

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WHAT\u2019S HAPPENING TODAY- <\/strong><\/p>\n

It\u2019s PMI day:<\/strong> S&P Global will release September\u2019s purchasing managers\u2019 index (PMI) at 6:15 CLT this morning. You can catch it here.<\/a> The downturn in Egypt\u2019s private sector eased in August<\/a> on the back of slowing inflation but remained firmly in contraction territory as the fallout from the war in Ukraine continued to impact the economy. The Saudi PMI is also due out today, while the UAE gauge will follow tomorrow.<\/p>\n

Austrian water companies continue investment talks in Egypt:<\/strong> Eight Austrian water companies are in Egypt (pdf)<\/a> to meet with government officials and local business leaders to discuss investment in Egypt\u2019s water, wastewater and desalination projects<\/p>\n

The Nobel Prize laureate(s) for physics <\/strong>will be announced today<\/a><\/strong> at the Royal Swedish Academy of Sciences in Stockholm. Swedish geneticist Svante P\u00e4\u00e4bo was awarded<\/a> the prize for physiology or medicine yesterday for his work on mapping the genome of Neanderthals.<\/p>\n

Up next: <\/strong><\/p>\n