The price of the dollar fell against the Egyptian pound at the end of trading today, Tuesday, as this comes after a series of record highs that pushed the American currency near the level of 51 pounds in official transactions in Egyptian banks.
Meanwhile, analysts and economic experts unanimously agreed that the recent rise in the price of the dollar against the Egyptian pound is considered temporary, resulting from increased demand from various parties, expecting the selling price to range between 52 and 55 pounds in the coming weeks as a maximum.
Temporary rise in the dollar
Mona Badir, a macroeconomic analyst, explained that this rise is temporary and may push the dollar price to 52 pounds or slightly more until the end of the year. She pointed out that there are factors putting pressure on the exchange rate of the pound, most notably the exit of some foreign investments from government debt instruments at the end of the year, as foreign investors close their financial positions, which increases the demand for foreign currency.
Badir added that current inflation expectations are also contributing to strengthening pressures on the exchange rate since the beginning of November, which increases demand for the dollar.
For her part, Zainab Hashem, a banking expert in treasury affairs and money management, pointed out that the escalation of geopolitical tensions in the region, especially the recent events in Syria, played a prominent role in supporting the rise in dollar prices. She pointed out that these tensions confuse investors in emerging markets, prompting them to redirect their investments, which is reflected in currency pricing.
Hashem agreed with Mona Badir that geopolitical tensions and inflation expectations constitute major factors putting pressure on the pound and supporting the increase in the price of the dollar. She stressed that these factors create a state of temporary instability, which leads to a rise in demand for the US currency.
Mona Badir expected that the pressures on the US currency would decrease at the beginning of next year, due to the entry of some expected flows, whether from offerings or the influx of some Arab investments.
Fair price per pound
Egyptian businessman and billionaire Naguib Sawiris stated that the rise in the price of the dollar against the Egyptian pound from 49.5 to 50.5 does not represent a source of concern, stressing that the real concern begins when the price reaches 60 or 70 pounds.
Sawiris stressed the need to accelerate the privatization of government assets, and to benefit from the experience of the Ras El Hekma project as a model to be emulated. He also called for converting Gulf countries’ deposits with the Central Bank into real investments inside Egypt to support the economy.
Sawiris pointed out the importance of promoting tourism as a means of increasing foreign currency flows, pointing to Egypt’s need to establish new hotels and improve the entry and exit facilities for tourists at airports. He also stressed the need to quickly privatize airports to enhance their efficiency.
Sawiris pointed out the importance of promoting tourism as a means of increasing foreign currency flows, pointing to Egypt’s need to establish new hotels and improve the entry and exit facilities for tourists at airports. He also stressed the need to quickly privatize airports to enhance their efficiency.
As for floating the currency, Sawiris pointed out that the problem lies in the abnormal decline of the pound, which affects manufacturers and importers due to the lack of foreign exchange in banks. He stressed the importance of liberalizing the market and leaving the determination of the price of the pound and the dollar to the forces of supply and demand. He added: “There is a fundamental error in managing the flotation file, as the fear of setting the price pushes people towards the black market.”
Regarding his assessment of the fair value of the pound, Sawiris stated that the current price between 50 and 60 pounds to the dollar reflects its natural value.
The dollar today against the Egyptian pound
The highest official price of the dollar was recorded today in Egypt at Abu Dhabi Islamic Bank, where it reached the level of 50.50 pounds for purchase and 50.59 pounds for sale.
In other banks, such as the National Bank of Egypt, the largest government bank in Egypt, the price of the dollar reached 50.40 pounds for purchase, and the selling price at 50.50 pounds.
As for the largest private sector bank in Egypt, the Commercial International Bank (CIB), the price of the dollar recorded 50.40 pounds for purchase, and the selling price at 50.50 pounds.
A new move for the central bank
The Central Bank of Egypt withdrew liquidity worth 1.294 trillion pounds in open market bidding today from 25 banks after its recent decision to amend policies for accepting bids with an interest rate of 27.75%.
The Central Bank withdrew liquidity worth 1.033 trillion pounds in open market tender from 26 banks last week.
The Central Bank confirmed that, in light of its keenness to follow the best international practices with regard to managing surplus liquidity in the banking system and improving the effectiveness of monetary policy decisions, it was decided to change the method of accepting bids for the main process of linking its deposits from the allocation method to the method of accepting all submitted bids, effective from… April 23, 2024, provided that the results of each linking process will be published on the website of the Central Bank of Egypt.
