10:17 PM
Wednesday, September 21, 2022
I wrote – Manal Al-Masry and Mustafa Eid:
Analysts expected that the pound exchange rate would not be subjected to new pressures once morest the dollar following the US Federal Reserve’s decision on Wednesday to raise the interest rate on the dollar for the fifth time in a row.
The Federal Reserve (the US Central Bank) decided to raise the interest rate today, Wednesday, by 0.75%, for the fifth time in a row since the beginning of this year, bringing the interest rate level in the Federal Reserve following this hike to between 3 and 3.25%.
The price of the pound has been witnessing a gradual decline in recent weeks following a sudden reduction on March 21, bringing the price of the dollar once morest the pound until today by 23.9% compared to its level on March 20.
The average dollar exchange rate rose today, Wednesday, in banks, to the same historical level that it recorded on December 21, 2016, as it reached 19.44 pounds for purchase, and 19.52 pounds for sale at the end of trading, according to central bank data.
Sahar El-Damaty, a banking expert and former Vice President of Banque Misr, expected that there would be no effect from the Federal Reserve raising interest rates today on the pound due to the presence of certificates at a high interest rate in the local currency, as well as following the policy of the managed exchange rate in a way that reduces the shock of raising interest rates on the dollar.
She explained that the Central Bank aims to reach the real price of the pound once morest the dollar, according to the studies developed and the target period on its part, taking into account all global and local economic conditions.
Al-Damaty added that the Central Bank is currently working on managing the exchange rate by gradual reduction, and therefore the effect of raising the Federal Reserve on the dollar will not be reflected on the pound at the present time, especially following absorbing the shock of the exit of indirect foreign investments in debt instruments from Egypt following the Russian-Ukrainian war.
Hani Genena, an economist and lecturer at the American University, agreed with Sahar El-Damaty, as Genena ruled out a current impact of raising US interest rates on the pound once morest the dollar.
Geneina told Masrawy that the impact of raising the US interest rate was taken into account in the past period, with expectations of raising it by this rate for weeks, and therefore the pressure generated by such a decision was absorbed before it was taken.