Cairo – Mubasher: The Central Bank of Egypt (CBE) would keep an eye on the country’s inflation rate before stepping closer to another devaluation of the local currency, according to a report by Mubasher Trade Research.
“CBE would prefer to see a single-digit headline inflation before initiating another round of EGP devaluation”, said Ramy Oraby, Economist at the research firm.
Egypt’s consumer price index (CPI), which covers urban consumer only, jumped to 13.97% in June 2016, compared with 12.30% a month earlier.
Meanwhile, the core inflation core inflation steadied at 12.37% year-over-Year in June, compared with an annual rate of 12.23% in May.
On a monthly basis, both rates significantly eased below FY16 averages at 0.78% and 0.74% respectively in June.
Nonetheless, June's flat annual core inflation may act as a transitional breaking point towards the devaluation, “bearing in mind the mounting pressure on the economy’s external sector”, the report indicated.
Inflation rates are forecast to reach 10-11% during the current 2015/16 and to ease down to 7-8% by 2018/19, official data indicated.
Yesterday, the Egyptian Exchange's indices collectively finished the trading session in the green zone on national and Arab investors’ stronger buying appetite as the central bank’s governor earlier alluded to a possible devaluation of the Egyptian pound.The benchmark index EGX30 bounced 4.66%, or 334.6 points, to 7,7517.43 points.
Translated by Ahmed Elsayed Ali
