Investment idea: Invest in local currency Egypt Government debt instrument yielding 16% + benefit from the currency comeback after a steep devaluation
- Last year Egypt enacted reforms required by IMF. IMF provided funding to Egypt
- Further reforms laws are being enacted
- As a part of the IMF lead reforms Egypt devalued its currency by 100%.
- To balance its budget Egypt stopped fuel subsidies
- Interest rates are around 16%
- The Egyptian economy is benefiting from the reforms and is starting to recover
- 16% yield represents a downside protection. If the economy improves part of the shock devaluation would reverse. An investor would make the 16% + a gain from currency uplift.