Dec. 12 (Bloomberg) -- Egypt’s pound weakened to a seven- year lows after Prime Minister Kamal el-Ganzouri said the country’s economic situation is worse than expected.
The pound dropped 0.1 percent to 6.0203 against the dollar at 12:21 p.m. in Cairo, after touching 6.0249, the lowest since January 2005. The currency has declined 3.6 percent this year after a popular uprising toppled President Hosni Mubarak. Twelve-month non-deliverable forwards, which provide a guide to expectations of currency movements, was unchanged at 7.0600, a 15 percent premium to the spot rate.
Egypt may resort to borrowing abroad while austerity measures may be needed to reign in the budget deficit and counter the deterioration of the economy, Ganzouri said at a news conference in Cairo yesterday. The government is targeting a deficit of 8.6 percent of gross domestic product. Moody’s Investors Services said Oct. 27 the gap may widen to more than 10 percent of GDP.
The yield on Egypt’s 5.75 percent dollar bond due April 2020 declined five basis points, or 0.05 percentage point, to 7.04 percent, according to data compiled by Bloomberg. The yield climbed to a record 7.09 percent on Dec. 9.
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