Amr El Alfy, Head of Research at Prime Holding Company, said that it is better for the Egyptian economy to see a flexible and gradual decline of the pound once morest other currencies, especially the US dollar.
Al-Alfi added, in an interview with Al-Arabiya, that: The devaluation of the currency helps the Egyptian economy To absorb any global crises that may occur.
He pointed out that the general budget of Egypt was affected by the consequences of the Russian-Ukrainian war that broke out in February 2022, and thus the conditions of the local economy were affected, which prompted the Central Bank to devalue the pound on March 21.
Al-Alfi said that the rate of devaluation of the Egyptian pound was regarding 15% in March, and was not accompanied by a loan from the International Monetary Fund. It was followed by another devaluation in October of 20%, accompanied by an agreement on a $3 billion loan from the International Monetary Fund.
He pointed out that when compared with the first flotation in 2016, the Egyptian currency witnessed a 55% decline once morest the dollar, and was accompanied by an International Monetary Fund loan of regarding $12 billion.
Al-Alfi said that the estimates regarding the devaluation of the pound last October indicate that the devaluation was not sufficient, and that the pound is supposed to decline further, which led to the emergence of speculations on the currency in the recent period.
And he believes that there is speculation regarding a new devaluation of the Egyptian pound once more, pointing out that devaluing the pound in the current period will not work because Egypt needs to have an export power in order to benefit from this depreciation of its currency.
And he stated that: “Deducing the pound once more will harm more than benefit at the present time, while the price boom of the dollar comes as a result of the lack of liquidity in the banking system.”
He expected that the dollar would be available in the market following the approval of the International Monetary Fund loan on December 16, and thus the dollar’s price would slow down.
Al-Alfy estimated that the Central Bank of Egypt would raise the interest rate by 1-2% until the first half of 2023, indicating that the increase in interest affects the financing expenditures of the Egyptian government.
As for stock prices, Al-Alfi mentioned that they rose dramatically last October, amid attempts by people to preserve the value of their money.
