The Egyptian currency crisis continues under the pressure of inflation: the dollar rose to 38 pounds in futures contracts
The Egyptian currency continued its decline in the futures contracts in the international markets, as the dollar rose to 38 pounds, at a time when it was trading in local banks’ dealings around 30.8 pounds.
According to Bloomberg agency data, reported by the local Economy Plus economic bulletin, today, Wednesday, the pound fell once more in non-deliverable futures contracts for a period of (12 months), to record between 37.9 pounds and 38 pounds per dollar.
And the US agency had said, the day before yesterday, Monday, that the Egyptian pound lost 6% of its value on the black market during the past week, due to the expectation of many that a new devaluation of the Egyptian currency would take place, amid escalating pressures, and the disruption of most of the plans that the government relied on to solve the crisis. .
Last Sunday, dealers in the exchange market told The New Arab that the exchange rate of the US currency jumped in the parallel market, to 34.50 pounds for sale, and 33.50 pounds for purchase, compared to 32.50 pounds for sale and 31.50 pounds for purchase, in the previous year. The transactions that took place at the end of last week, amid expectations of a further rise in the coming days.
Banks, most notably the French “Societe Generale”, “Bank of America”, the Swiss “Credit Suisse” and the British “HSBC”, expected the pound to decline by between 10% and 13% before the end of this month, under pressure from the increasing debt on the bank. Egypt has led to its need for a cheaper local currency, with a widening current account deficit and an acute shortage of dollars.
Credit Suisse said that the pound is likely to drop to 35 pounds per dollar in the short term.
The value of the Egyptian pound declined by regarding 24% in bank transactions once morest the dollar during January, bringing the total percentage of its depreciation to nearly 50% since March of last year.
The crisis of the accumulation of goods in Egyptian ports has also re-emerged due to the failure to provide the dollar to importers, whose value has so far reached $4 billion, despite previous government promises to finally overcome the crisis.
Ahmed Shiha, the former head of the Importers Division at the Cairo Chamber of Commerce, who is a member of the General Assembly of Importers, said in media statements that the current period is witnessing difficulty in procuring the dollar needed to import various products and raw materials, except for food industries, which are quickly procured.
Standard high inflation
A Archyde.com poll conducted on Tuesday showed that consumer price inflation in Egyptian cities will rise in February to its highest level in more than five years, following devaluing the Egyptian pound more than once in January.
According to the poll, annual inflation will rise to 26.7% in February compared to 25.8% in January, and this will be the highest level of inflation since October 2017 when it reached 30.82%.
Capital Economics expected the inflation rate in February to reach 28.8%, and said, “Inflation in Egypt will continue to rise in the coming months, but it is expected to reach its peak soon. The weak performance of the pound will continue to drive inflation of imported goods.”
“We believe that urban price inflation will peak at more than 30% year-on-year in April, and the risks, if any, lie on the upside of inflation,” she added in a note.
The Petroleum Products Pricing Committee announced a 10% hike in gasoline prices at its quarterly meeting last week, but left the price of diesel unchanged, a move possibly aimed at slowing increases in freight and mass transit rates.
rate hike expectations
The Central Agency for Public Mobilization and Statistics in Egypt is scheduled to announce inflation data for the month of February, tomorrow, Thursday morning.
A sharp rise in inflation might put pressure on the central bank’s monetary policy committee to raise interest rates when it meets on March 30.
Economy Plus quoted Egyptian experts as expecting the Central Bank of Egypt to raise interest by 200 basis points (2%) until the end of the current fiscal year, next June.
In its last meeting held on February 2, the Monetary Policy Committee kept interest rates unchanged at 16.25% for deposits and 17.25% for lending.
The committee said at the time that an increase in interest rates by regarding 800 basis points over the past year would help control inflation.
