The price of the dollar rose in Egypt in official transactions at the end of trading on Monday, as this comes despite the increase in remittances from Egyptians abroad.
This decline also comes in light of statements by Egyptian Prime Minister Mostafa Madbouly regarding the possibility of the price of foreign currencies moving up and down against the pound by about 5%.
The increase in remittances from Egyptian expatriates is expected to contribute to reducing Egypt’s current account deficit to 4.8% of GDP during the current fiscal year, compared to 6.8% in the previous year, according to Fitch Solutions.
The company reported that remittances from Egyptian workers abroad will reach about $28.7 billion during this fiscal year, compared to $21.9 billion in the previous year, which constitutes an increase of approximately 31% on an annual basis.
According to data from the Central Bank of Egypt, remittances from Egyptians abroad witnessed a jump to their highest levels in two years in the second quarter of 2024, reaching $7.5 billion in the period from April to June, compared to only $5 billion in the first quarter. On an annual basis, transfers increased by 63%.
Exchange rate unification, implemented last March, contributed significantly to increased remittances through official channels, as it encouraged expatriates to use the banking sector instead of resorting to the parallel market, according to Fitch.
The market has witnessed an adjustment in the exchange rate several times, most recently in March 2024, when it was agreed with the Fund to increase the loan to $8 billion, which led to relative stability in the exchange rate at levels close to 50 pounds to the dollar recently.
The most important influencing factors
Dr. Medhat Nafea, a faculty member at the Faculty of Economics at Cairo University, said that the statements of the Egyptian Prime Minister regarding the exchange rate of the pound must be within the limits of private impressions on the part of a citizen interested in the issue of the exchange rate, and there must be a clear warning that these statements are not issued in a negative manner. Official, stressing that the Central Bank is the only body authorized to issue statements related to monetary policy and monetary sovereignty.
These statements came after Prime Minister Mostafa Madbouly announced that the price of the pound may witness fluctuations of up to 5%, stressing that previous mistakes related to fixing the exchange rate will not be repeated.
Nafi explained that the link between a state’s power and its currency is understandable in economics and politics, but monetary sovereignty requires flexibility in moving the currency without a significant loss in its purchasing power. He pointed out that the International Monetary Fund does not oppose a flexible peg to the exchange rate, as the price moves within a specific range that is determined based on technical indicators. He considered that Madbouly’s statements about the rate of movement are illustrative and not a specific policy, as the Central Bank still has the decisive role in determining this range.
He stressed that the reasons for the rise in the exchange rate of the dollar against the pound varied between geopolitical and structural factors in the Egyptian economy, such as weak production and heavy reliance on imports, in addition to obligations related to external debt and receivables of foreign companies. He pointed out that these factors put pressure on foreign exchange and contribute to exchange rate fluctuations.
He concluded that reducing dependence on the dollar requires enhancing local production and deepening national industry, which reduces the demand for foreign currency.
He added that partial control of the exchange rate through monetary policy is legitimate and acceptable, especially in light of the current economic conditions, to avoid violent shocks that affect the economy and citizens.
The dollar today against the Egyptian pound
The highest price for the dollar was recorded today in Egypt at Med Bank, where it reached the level of 49.81 pounds for purchase and 49.83 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 49.65 pounds for purchase, and the selling price at 49.75 pounds.
As for the largest private sector bank in Egypt, the Commercial International Bank (CIB), the price of the dollar recorded 49.67 pounds for purchase, and the selling price at 49.77 pounds.
At the Central Bank, the dollar recorded at the end of today’s trading the level of 49.6482 for purchase, and the level of 49.7833 for sale. By the end of yesterday’s trading, the price of the dollar had recorded a level of 49.5235 pounds for buying, and a level of 49.6575 pounds for selling.
