Egypt Expects $12 Bn in Gas Revenues in 2022

A view of a gas plant seen from the desert road of Suez outside Cairo. (Reuters)
A view of a gas plant seen from the desert road of Suez outside Cairo. (Reuters)
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Egypt Expects $12 Bn in Gas Revenues in 2022

A view of a gas plant seen from the desert road of Suez outside Cairo. (Reuters)
A view of a gas plant seen from the desert road of Suez outside Cairo. (Reuters)

Egypt's gas revenues are expected to reach $12 billion, and about $7 billion from oil derivatives and petrochemicals, announced petroleum minister Tarek el-Molla.

Molla spoke to Skynews Arabia on Monday on the sidelines of his participation in the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC).

He said that Egypt aims to increase liquified natural gas (LNG) exports to eight million tons this year, adding that the country can export up to 12 million tons of LNG annually.

Egypt depends on gas exports to increase the foreign currency when the country is suffering from a scarcity of the dollar, which causes problems for exporters.

For the third time since 2016, Egypt has liberalized the exchange rate, causing the pound to lose about 50 percent of its value since the beginning of this year.

On Thursday, Egyptian authorities liberalized the exchange rate to end the black market, where the dollar price reached 24 to 25 EGP, coupled with the Central Bank of Egypt's (CBE) decision to raise interest rates by two percent.

An International Monetary Fund (IMF) official said that Egypt's move to raise interest rates is a step in the right direction, and a flexible exchange rate will help protect its economy from shocks during tightening global financial conditions.

Egyptian authorities pledged a "durably flexible" exchange rate with a staff-level agreement for a $3 billion IMF extended fund facility.

The central bank also raised interest rates by 200 basis points in an out-of-cycle meeting.

"The measures that the central bank took last week in hiking interest rates goes in the right direction. It is very important to control inflation," the director of the IMF's Middle East and Central Asia Department, Jihad Azour, told Reuters.

"The move to a flexible exchange rate will help the Egyptian economy to be protected from term-of-trade shocks as well as external shocks, especially at a time when global financial conditions have tightened and become more challenging," he said.

Egypt has been struggling to cope with the impact of the war in Ukraine, which led to rapid outflows of portfolio investments, a hike in the commodity import bill, and a drop in tourism revenues.

The IMF said on Thursday that a flexible exchange rate regime should be "a cornerstone policy" for rebuilding and safeguarding Egypt's external resilience.

It confirmed a staff-level agreement on a $3 billion, 46-month Extended Fund Facility.

It said the deal was expected to catalyst a large, multi-year financing package, including about $5 billion in the fiscal year ending June 2023, reflecting "broad international and regional support for Egypt."

Asked if there were assurances on assistance from wealthy Gulf states, Azour said: "Yes, and some of the Gulf authorities already issued statements in support of the program."

He said the $5 billion for FY2022-23 would be in addition to the extension of Gulf states' deposits in Egypt's central bank.

He said that any steps by Egypt that increase predictability and bring confidence back are welcomed and allow Egypt to cover its financing needs.

"We see that through these programs, there are enough financing assurances to cover their (Egypt's) external financing needs," he added.



Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
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Firm Dollar Keeps Pound, Euro and Yen Under Pressure

US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
US Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

The US dollar charged ahead on Thursday, underpinned by rising Treasury yields, putting the yen, sterling and euro under pressure near multi-month lows amid the shifting threat of tariffs.

The focus for markets in 2025 has been on US President-elect Donald Trump's agenda as he steps back into the White House on Jan. 20, with analysts expecting his policies to both bolster growth and add to price pressures, according to Reuters.

CNN on Wednesday reported that Trump is considering declaring a national economic emergency to provide legal justification for a series of universal tariffs on allies and adversaries. On Monday, the Washington Post said Trump was looking at more nuanced tariffs, which he later denied.

Concerns that policies introduced by the Trump administration could reignite inflation has led bond yields higher, with the yield on the benchmark 10-year US Treasury note hitting 4.73% on Wednesday, its highest since April 25. It was at 4.6709% on Thursday.

"Trump's shifting narrative on tariffs has undoubtedly had an effect on USD. It seems this capriciousness is something markets will have to adapt to over the coming four years," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

The bond market selloff has left the dollar standing tall and casting a shadow on the currency market.

Among the most affected was the pound, which was headed for its biggest three-day drop in nearly two years.

Sterling slid to $1.2239 on Thursday, its weakest since November 2023, even as British government bond yields hit multi-year highs.

Ordinarily, higher gilt yields would support the pound, but not in this case.

The sell-off in UK government bond markets resumed on Thursday, with 10-year and 30-year gilt yields jumping again in early trading, as confidence in Britain's fiscal outlook deteriorates.

"Such a simultaneous sell-off in currency and bonds is rather unusual for a G10 country," said Michael Pfister, FX analyst at Commerzbank.

"It seems to be the culmination of a development that began several months ago. The new Labour government's approval ratings are at record lows just a few months after the election, and business and consumer sentiment is severely depressed."

Sterling was last down about 0.69% at $1.2282.

The euro also eased, albeit less than the pound, to $1.0302, lurking close to the two-year low it hit last week as investors remain worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen hovered near the key 160 per dollar mark that led to Tokyo intervening in the market last July, after it touched a near six-month low of 158.55 on Wednesday.

Though it strengthened a bit on the day and was last at 158.15 per dollar. That all left the dollar index, which measures the US currency against six other units, up 0.15% and at 109.18, just shy of the two-year high it touched last week.

Also in the mix were the Federal Reserve minutes of its December meeting, released on Wednesday, which showed the central bank flagged new inflation concerns and officials saw a rising risk the incoming administration's plans may slow economic growth and raise unemployment.

With US markets closed on Thursday, the spotlight will be on Friday's payrolls report as investors parse through data to gauge when the Fed will next cut rates.