Business Maverick: Default jitters stalk Egypt, sending traders on a wild ride

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An already turbulent year for emerging-market traders is getting another shot of adrenaline as Egypt fights to avert a debt crisis.

Support from the IMF could be the difference maker – something investors who are sticking it out in the region point to, alongside the nation’s foreign-exchange reserves. While the central bank’s net international reserves fell to $33.14-billion in July, they’re still enough to fund Egypt’s current-account deficit and external debt in the near term, investors say.

“Egypt is not Sri Lanka – it has much higher reserve buffers and much better financing options going forward,” said Matthew Vogel, London-based portfolio manager and head of sovereign research at FIM Partners. “Egypt’s problem is manageable with tighter policies and official creditor support.” Just days after a leadership shakeup at the central bank, Egypt’s prime minister said on 22 August that the country is nearing an agreement with the IMF on a new loan. Veteran financier Hassan Abdalla is now acting chief of the central bank, replacing Tarek Amer, who was seen as supportive of a stable pound.pushed the nation’s pound to the lowest since December 2016 in the offshore market last week.

The Caixin manufacturing PMI, which focuses more on smaller private companies and exporters, is likely to drop into contractionary territory in August;

 

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