{"id":614680,"date":"2024-02-06T00:00:00","date_gmt":"2024-02-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2024\/02\/06\/blinken-has-landed-in-the-region\/"},"modified":"2024-02-06T00:00:00","modified_gmt":"2024-02-06T00:00:00","slug":"blinken-has-landed-in-the-region","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2024\/02\/06\/blinken-has-landed-in-the-region\/","title":{"rendered":"Blinken has landed in the region"},"content":{"rendered":"

Good morning, friends. <\/strong>The news cycle is beginning to pick up. We have econ, M&A, and diplo news for you this morning. <\/p>\n

THE BIG STORY HERE AT HOME- <\/p>\n

Twelve-month non-deliverable forwards have dipped and stabilized yesterday at c. EGP 57.00 to the greenback \u2014 down from a high of nearly 67 just a few days ago, Bloomberg<\/a> reports, citing market data. The EGP has strengthened on the parallel market as well after falling last week to >70 to the greenback, underscoring our view that the plunge was fuelled by speculation, not fundamentals. <\/p>\n

The greenback was changing hands at <\/strong>EGP 48-56 yesterday, according to domestic media reports. <\/p>\n

<\/a> MEANWHILE- <\/strong>Oxford Economics sees the EGP falling to 55-60 to the USD in banks by the end of the year<\/strong> if the central bank moves to a flexible exchange rate regime, it said in a report picked up by Zawya<\/a>. Meanwhile, Capital Economics sees the EGP falling further<\/a> to sit at 65 against the greenback, giving color to a November report<\/a> where it suggested that policymakers need to loosen their grip on the exchange rate soon to maintain the balance of payments and attract fresh capital inflows.<\/p>\n

Everyone is singing the same tune: <\/strong>Last week, S&P Global Ratings said it is expecting<\/a> authorities to devalue the EGP to half its current official value to unlock the remainder of the IMF package. Morgan Stanley also said it sees a devalued EGP is our future, without providing much details. <\/p>\n

Higher inflation on the way:<\/strong> Oxford Economics expects annual headline inflation to peak in 4Q 2024 at 40-45%. Inflation dropped for a third consecutive month in December to 33.7%<\/a>, but Standard Chartered expects<\/a> it to rise again in January following the government\u2019s recent price hikes \u2014 including those imposed on <\/a>mobile bills<\/a> and <\/a>electricity<\/a>.<\/p>\n

AND- <\/strong>Decision to slash public spending and scrap gov\u2019t tax breaks is now official: <\/strong>Last week\u2019s cabinet decisions<\/a> to cut allocations for public investment for the current fiscal year and to scrap tax exemptions granted to state entities and public-sector companies and projects are now official, according to the Official Gazette. <\/p>\n

<\/a> ALSO<\/strong>- Blinken is in the region:<\/strong>US Secretary of State Antony Blinken landed in Saudi Arabia yesterday, kicking off a four-day regional trip. <\/p>\n

On the agenda yesterday in Riyadh: <\/strong>An \u201cenduring end to the crisis in Gaza,\u201d \u201cbuilding a more integrated and prosperous region and reaffirm[ing] the strategic partnership between the United States and Saudi Arabia\u201d (read: recognition of Israel in return for an expanded US defense pact). The two also discussed the situation in the Red Sea, a readout from the State Department<\/a> said.<\/p>\n

He\u2019ll be in Cairo soon: <\/strong>He is scheduled to visit Egypt, Qatar, Israel, and the West Bank until Thursday, 8 February, as part of his fifth trip to the region since war broke in Gaza in October. We think it likely he\u2019ll be here today \u2014 that he\u2019s following the literal order in which countries were listed in the announcement of the tour, which read \u201cSaudi Arabia, Egypt, Qatar, Israel, and the West Bank.\u201d<\/p>\n

The key message to the region:<\/strong> Delivering \u201ca message directly to countries in the region that the United States does not want to see the conflict escalated and will not escalate the conflict,\" a senior US official told reporters<\/a>.<\/p>\n

SIGN OF THE TIMES-<\/p>\n

<\/a> McDonald\u2019s 4Q revenues fall short of estimates amid MidEast boycotts: <\/strong>McDonald\u2019s missed Wall Street\u2019s estimates for quarterly sales growth for the first time in almost four years, with the company saying that the impact of the ongoing war in Gaza has undermined sales, according to its latest earnings release (pdf)<\/a>. The company\u2019s sales in its international developmental licensed markets segment edged up just 0.7% during the quarter, compared to estimates of 5.5%, according to LSEG data cited by Reuters<\/a>.<\/p>\n

ALSO-<\/strong> The fast food giant\u2019s global same-store sales rose 3.4% in 4Q, well below estimates of 4.9%, marking the slowest growth for the segment in nearly three years. <\/p>\n

THE EGYPT ANGLE- <\/strong>McDonald\u2019s is one of several Western goods and brands that have been subject to boycotts in the Middle East due to its perceived support for Israel. McDonald's Egypt has been trying to get in Egyptian\u2019s good grace \u2014 reiterating the fact that it is 100% Egyptian-owned<\/a> and announcing an EGP 20 mn donation<\/a> to those in need in Gaza. The fast food chain has also announced a long list of offers and price reductions in efforts to reel in boycotters. <\/p>\n

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HAPPENING TODAY-<\/p>\n

It\u2019s your last chance to catch the Cairo Book Fair: <\/strong>This year\u2019s Cairo International<\/a>Book Fair<\/a> will close its doors later today. If you haven\u2019t gotten the chance to visit it, you can check it out between 10am and 8pm. The 2024 edition of the fair is the biggest to date, with some 4.5 min visitors<\/a> having passed through its gates.<\/p>\n

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CIRCLE YOUR CALENDAR- <\/p>\n

<\/a> Aviation conference lands in Cairo:<\/strong> Egypt will host this year\u2019s ACI Africa Regional<\/a>Conference<\/a> \u2014 under the theme Airports: Levers of Socioeconomic and Sustainable Growth \u2014 bringing together industry leaders, experts, and innovators. The event will be held from 21 February to 1 March at the Alamera Hall Air Forces House Center and Le M\u00e9ridien, Cairo Airport. Register here<\/a> to attend the conference.<\/p>\n

Check out our full calendar on the web<\/a><\/strong> for a comprehensive listing of upcoming news events, national holidays and news triggers.<\/p>\n

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THE BIG STORY ABROAD- <\/p>\n

<\/a> One story dominates the front pages of the global press this morning: <\/strong>The UK\u2019s King Charles III has been diagnosed with \u201ca form of cancer\u201d at the age of 75, a year and a half after coming to the throne, according to a statement<\/a> released by Buckingham Palace yesterday. The form of cancer was not specified. Charles will continue to work behind closed doors, but will be stopping public activities while he seeks treatment. <\/p>\n

The story got plenty of ink in the int\u2019l papers:<\/strong>BBC<\/a> | Associated Press<\/a> | NBC News<\/a> | Reuters<\/a>. <\/p>\n

PSA- Is your spawn about to apply to college abroad? <\/strong>We have two stories you\u2019ll want to know about this morning: <\/p>\n