Wednesday, 02 January 2013 16:51
LONDON: Egyptian debt insurance costs surged to 4-1/2 month highs on Wednesday as the country's currency extended its slide, falling to a fresh record low against the dollar.
Data from Markit showed 5-year credit default swaps (CDS) jumped 27 basis points from the previous close to 515 bps.
The Egyptian pound hit a new record low to bid at 6.39 per dollar, continuing to slide as the central bank held its third dollar auction as part of a new strategy aimed at slowing depletion of its hard currency reserves.
Neil Shearing, an economist at Capital Economics, predicted the pound exchange rate at 7 per dollar by year-end.
"The most important issue for investors is how the pound will get there, whether the central bank can manage it in a transparent manner or will there be a messy devaluation," he said.
Center>Copyright Reuters, 2013