I wonder where the black market for the dollar has gone? And where are the currency traders who were flooding the market with rumors and damaging the country’s economy? What is the role of the central bank in what happened? How could he end the chaos that existed in the currency exchange market? More importantly, why has the world returned to stability after the dollar has moved in the bank recently? Read this report until the end and know all the details.
In order to understand what is happening in the exchange market currently, I must tell you the story from the beginning… Last March, the whole market was tense and the dollar was playing a game of cat and mouse… Its price was flying on the black market, until it reached crazy numbers. They were talking at the time about 70 pounds. People were losing hope and the currency traders thought they had won the round. But suddenly, the central bank decided to have its say.
The first step the central bank took was to liberalize the exchange rate. This step was like a shock, but it was intended to establish new rules for the game. The dollar’s price in banks was still determined realistically based on supply and demand, not according to the whims of the black market. And the idea was clear, creating an official market. A real competitor
But the Central Bank was not satisfied with that.. It focused on restoring the confidence of Egyptians abroad, which had been frustrated by the problems of transfers and exchange rates. Here we began to see strong measures, including new facilities for transferring funds, exemptions and reductions on some fees, and real offers from banks that provide special prices for transfers from abroad.
The result was that remittances from Egyptians abroad began to rise again, and with them the cash reserves began to improve…and the Central Bank proved that it is capable of confronting the black market tycoons, step by step.
Why were these steps effective?
Because the black market depends on the lack of confidence in the official system… and the first time Egyptians abroad felt that their money was safe and that the exchange rate in the banks remained close to the black market, the game was over.
Here there is a very important point… The Central Bank is not the only one who says that it is correct. International institutions such as the International Monetary Fund praised what happened and said that liberalizing the exchange rate was a bold step and that these measures strengthened market stability and helped restore balance.
What is also interesting is that a report from the International Monetary Fund indicated that Egypt now has the ability to attract foreign exchange flows stronger than before. This means that the plan was not only to address a temporary crisis, but it was also to prepare the ground for the future.
We come to an important question: Why has the price of the dollar moved again in the banks recently?
This is a very important question.. But keep in mind that the flexibility of the exchange rate has become a natural and healthy thing, as long as the banking sector is able to cover all customers’ foreign exchange needs and dollar liquidity is available. It does not matter whether the dollar moves up or down. What is important is that it is available.. And the most important thing is that the movement in the exchange rate The dollar last week was mainly due to the rise in the dollar index against the major currencies, not just the Egyptian pound. If you follow, you will know that the prices of the euro and the British pound decreased significantly compared to the Egyptian pound. During the past weeks.. the exchange rate of the dollar against the pound also declined at the end of last year’s transactions as a result of the increase in the dollar resources of the banks.
