Egyptian pound devaluation likely to be required - JPMorgan

LONDON, March 8 (Reuters) - Analysts at investment bank JPMorgan said on Tuesday that a steep devaluation of Egypt's pound was likely to be required and that it may need more IMF assistance if financial market pressures continue to intensify.

The mix of much higher commodity and food prices and a potential drop in Russian holidaymaker numbers is set to do further damage to Egypt’s already-strained finances.

"We expect an FX devaluation will now likely be required," JPMorgan said, estimating the Egyptian pound was currently more than 15% overvalued.

It laid out scenarios. One with no devaluation, one similar to 2014/15 when authorities allowed the currency to depreciate by roughly 5% and another with a larger cut as part of a new IMF package.

"This scenario analysis results in a weighted probability depreciation of 8.5% from current spot," JPMorgan said, adding its target was for a drop in the Egyptian pound to 17.25 per dollar.

The Egyptian currency was recently bid at 15.72 per dollar according to Refinitiv data, about 10% away from JPMorgan's target.

Reporting by Marc Jones; editing by Rodrigo Campos

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