Egypt: Downgrade local debt to Sell amid devaluation concerns

  • There is a growing consensus that the EGP is overvalued and further depreciation is necessary to reduce BOP imbalances

  • Resignation of CBE governor could signal policy shift, but today's decision to hold rates will keep pressure on EGP

  • Overvalued currency and low real yields, and EGP-US$ yield differential make local debt unattractive; downgrade to Sell

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