Egypt’s Stocks Rise Most in World Amid Mounting Devaluation Bets

Updated on
  • Local currency slumps to record in black market trading
  • Saudi Arabia aid seen bringing devaluation, IMF deal closer

Egyptian stocks rose the most in more than two months on speculation the country is about to devalue its currency after receiving cash aid from Saudi Arabia. The pound slumped to records in black-market and futures trading.

The EGX 30 Index climbed 3.9 percent at the close in Cairo, the most since July and more than about 90 major gauges tracked by Bloomberg, as MSCI Inc.’s Emerging Markets Index declined. Global Telecom, the only company on the benchmark gauge with zero revenue or assets denominated in Egyptian pounds, was the biggest gainer with an 11 percent spike.

Egypt has received a $2 billion deposit from Saudi Arabia, a central bank official said Wednesday, paving the way for a $12 billion loan the nation has requested from the International Monetary Fund. The facility is seen by economists as critical to reviving the nation’s crumbling economy, but some actions required to seal the accord -- including measures related to the exchange rate and subsidies -- are still pending, IMF Managing Director Christine Lagarde said on Saturday.

Prompting Investors

“The news overnight about the Saudi deposit is prompting investors to speculate that the devaluation is imminent,” said Sherif Shebl, an equities trader at Pharos Holding for Financial Investments in Cairo. “People are acting according to their expectations of what the central bank will do.”

The pound tumbled in the black market to 15.58 per dollar, according to the average quote of four dealers in Cairo and Alexandria surveyed by Bloomberg on Thursday. That takes its loss this month to 17 percent and widens the premium people are paying for the U.S. currency to 75 percent over the official exchange rate, which has been maintained by the central bank since March at 8.88 pounds to the dollar. The currency’s 12-month non-deliverable forwards plunged 4.7 percent to a record 13.7 per dollar.

About 1.2 billion pounds ($133 million) of shares traded, the most since July and more than twice the market’s one-year daily average. Global Telecom rose the most since 2012.