An employee counts banknotes at currency exchange shop in the Egyptian capital Cairo on November 3, 2016. AFP / KHALED DESOUKI
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The pain of Egypt's currency devaluation may be felt well before the benefits, creating a period of at least several months in which there is little positive news to offset rising inflation and falling living standards, businessmen and economists say.Regional investment bank Arqaam Capital said the devaluation could bring $12 billion of foreign money into Egypt's bond market and $4.5 billion into equities – but it estimated this might take a year.The resulting rise in inflation probably won't be as big as the currency's fall, partly because about 90 percent of imported consumer goods were already being paid for at black market currency rates in the months before the devaluation.Reham al-Desoki, senior economist at regional investment bank Arqaam Capital, estimated the devaluation and fuel price hikes introduced last Friday would raise annual inflation to 18-20 percent around the end of this year and a peak of about 22-24 percent next year, from 14.1 percent in September.Partly because of the devaluation, the government could overshoot its 9.8 percent deficit target for the current year by several percentage points, Desoki said.
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