2023-05-10 14:08:00
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Investing.com – Although the pound has been stable once morest foreign currencies for nearly two months, BNP Paribas (EPA:) expects – BNP Paribas That it will rise once morest the pound to the mid-thirties in the coming months, as the French bank indicated that it is difficult to predict the price specifically in light of the uncertainty that we are witnessing now.
The bank added that the Egyptian pound will not decline sharply once morest foreign currencies, but expects a new gradual devaluation of regarding 5-10%.
On the other hand, the data of the Central Agency for Public Mobilization and Statistics in Egypt today revealed that annual inflation in Egyptian cities slowed in April for the first time since June 2022, as it was on an upward trajectory during the past months without slowing down.
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The pound, fund review, and interest decision
Mohamed Abdel Magid, an economist in the Middle East and North Africa at BNP Paribas, said that slowing inflation is among the factors that justify keeping interest rates unchanged by the Central Bank of Egypt at the upcoming meeting on May 18.
However, he stated that the monetary policy meeting scheduled for next June would be appropriate to increase interest rates with higher inflation rates expected in the third quarter.
He added that among the reasons supporting fixing the interest rate in Egypt is the slowdown in the growth rates of the money supply, which is a very important factor for the Egyptian Central Bank, as the excess liquidity in the market in the past months was one of the main reasons for pushing inflation rates upward.
With regard to the second tranche of the International Monetary Fund loan to Egypt, Abdel-Meguid said that it will be disbursed, provided that the Egyptian Central Bank is committed to the flexibility of the exchange rate. Pointing out that the Central Bank does not completely close the gap between the official and parallel markets.
inflation data
The consumer price index slowed in April, coming in at around 30.6 percent year-on-year, compared to 32.7 percent in March.
The French bank stated that among the reasons for the slowdown in inflation, the exchange rate was fixed by the Central Bank of Egypt at levels close to 31 pounds to the dollar, in addition to the slowdown in the growth of the money supply, along with the slowdown in the prices of some food commodities.
He continued, “Inflation rates in Egypt are subject to increase in the coming period, as the slowdown in April is temporary.”
He indicated that the increase in inflation rates in the coming period will be driven by the Egyptian government’s decision to increase diesel prices locally, in addition to the expected increase in energy and electricity prices, particularly with the start of the new fiscal year.
He stated that if the Central Bank of Egypt lowered the pound once more, it would undoubtedly be another factor towards the upward movement of inflation rates.
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