Shares in Egypt surged to their highest level in nearly four weeks yesterday as speculation mounted that the country plans to devalue its currency to stimulate economic growth.
Egypt’s EGX 30 closed up 4.4 per cent at 7,505.44, the index’s best one-day performance since mid-March, topping gains for the region. The country’s largest listed company, Commercial International Bank Egypt, closed up 7 per cent at 43.40 Egyptian pounds, its best one day performance close since mid-March.
“There’s growing expectation of some form of further currency devaluation announcement, possibly in conjunction with the foreign exchange auction this Tuesday,” said Julian Bruce, the head of institutional trading at Egyptian investment bank EFG-Hermes in Dubai.
Egypt devalued its currency by 13 per cent in March, after foreign currency reserves fell to US$16.5 billion – or three months of export cover – at the end of February, compared with $36bn before the country’s revolution in early 2011. The country’s net foreign reserves rose to $17.5bn at the end of last month.
Speculation about a further currency devaluation in Egypt has been rising since earlier this month, after Tarek Amer, the central bank’s governor, said that such a move would help boost Egyptian exports and that the policy of defending the pound over the past five years had been a “grave mistake”.
UAE shares were mixed on the first day of trading after the Eid Al Fitr holiday.
The Dubai Financial Market General Index ended the day up 0.4 per cent at 3,385.29, thanks to gains by Arabtec Holding. The construction group’s shares surged 5.5 per cent, their highest one-day gain since early April, closing at a four-week high of Dh1.51.
Shares in Abu Dhabi closed 0.1 per cent lower at 4,568.00, dragged down by FGB and other banking stocks.
Saudi Arabia’s Tadawul All Share Index led gains across the Arabian Gulf region, closing up by 0.8 per cent ahead of the release of a number of second-quarter earnings later this week.
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