Cent Discount and Yuan Devaluation

yuan devaluation: Forward contracts imply a 20 per cent weakening in 12 months and the country foreign-listed shares trade at a 12 per cent discount to local prices, according to Business Week. If the signs are right, Egypt may follow nations such as Kazakhstan and Vietnam that were forced to depreciate their currencies after China shock yuan devaluation on 11 August. The black market for dollars on Cairo streets has re-emerged for the first time since April, signalling investors and businesses are betting the pound official rate of 7.83 per dollar no longer represents its true value. The North African nation, which weakened its currency peg twice in 2015, can’t afford the loss of export competitiveness as it seeks to boost foreign-exchange holdings that have barely recovered from a plunge that wiped out more than half of them following the so-called Arab Spring protests four years ago. Investors see this, as well as the increased monetisation of government debt and slow recovery of foreign direct investment and tourism, as reasons for the pound to weaken. China devaluation is pushing all emerging markets to do the same to stay competitive, leaving Egypt with no choice but to follow suit, said Omar El-Shenety, the managing director of Cairo-based investment bank Multiples Group. (news.financializer.com). As reported in the news.