Egypt’s major stock index, EGX30, ended the day at 8,459.38 points. This represents a growth of 24.7 percent over the past one year. Analysts have attributed this to the market’s signal that it supports the military’s plans for the nation. This notion has been strengthened by the growing prospects that Egypt’s defense minister Field Marshal Abdel-Fattah el-Sissi is likely to vie for presidency.
“Having a very tight political agenda is keeping the market solid,” said Ahmed Abou el-Saad, who heads Rasmala Egypt Asset Management. “Egyptian companies are seeing double-digit growth rates.”
The Egyptian central bank has also boosted the market by loosening restrictions on foreign currency outflows, which it squeezed in 2012 to bolster the fast-depreciating Egyptian pound. This saw worried citizens hurriedly convert savings into dollars.
Most economists opine that the Egyptian pound, which stands at 7 pounds to the dollar, is overvalued and fixed by the government, which uses rapidly-depleting forex reserves to keep the value high.
The government this week paid outstanding debts to foreign lenders that had been halted to substantially reduce the amount of foreign currency exiting the country. This move was applauded by analysts, who termed it as a positive indicator to foreign investors.
The local market has also flourished after United Arab Emirates and Saudi Arabia promised to lend the country $3 billion and $5 billion respectively a day after former President Mohammed Morsi was ousted.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com