2023-08-14 09:02:00
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Investing.com – With talk growing regarding a possible devaluation of the Egyptian pound once morest foreign currencies, especially as the IMF’s review of Egypt’s financing program approaches, the black market has witnessed notable movements over the past few hours.
At the same time, the gold market began pricing in the possible depreciation of the pound, especially following the rise of the dollar in the parallel market, as it rose significantly in Egypt during Thursday and Friday trading, despite its global decline.
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The black market dollar is moving
“It appears that the government would prefer to collect a larger amount of foreign currency before allowing the pound to float, to contain the potential impact on the cost of living and financial accounts,” said economists at Morgan Stanley (NYSE:) including Alena Slyusarchuk in a recent report.
The bank’s economists added: “Our basic expectation is that the IMF program will remain in force with the first and second reviews likely between September and December, which we believe will require further adjustments in the exchange rate and interest rates.”
The bank expects that the exchange rate of the Egyptian pound once morest foreign currencies will be adjusted during next September or October, that is, around the time of the first and second reviews of the International Monetary Fund.
It is worth noting that floating the exchange rate of the Egyptian pound once morest foreign currencies is one of the most important conditions of the IMF that were agreed upon with the Egyptian government, and for this reason the first review was not conducted last March as planned, according to expert estimates.
Moody’s had put Egypt’s sovereign credit rating in both local and foreign currencies and the outlook, under negative review, for an additional three months, in light of the lack of liquidity in foreign currency in conjunction with large external debt payments over the next two years.
And Moody’s said in a statement: “The continued lack of foreign exchange liquidity as evidenced by the black market despite the improvement in the current account gap, and the impact of the terms of the new trade deals on the food and energy sectors already, exacerbates the possibility of devaluation of the pound in the official market, which is This will result in higher inflation, borrowing costs, and the general government debt ratio to levels more consistent with a lower rating level. This is despite the government’s demonstrated ability to increase revenues and outpace primary fiscal surplus targets.”
In general, the dollar declines on the black market whenever there is reassuring news regarding the state of the Egyptian economy, or the issuance of expectations from international institutions and banks stating that the pound will not decline in the near future, as supply increases and demand decreases in this case. And vice versa, the dollar rises and demand increases whenever the news is negative and not reassuring.
The official exchange rate has remained stable at regarding 30.90 pounds per dollar for months, while the dollar has declined once morest the Egyptian currency on the black market to levels ranging from 38 to 40 pounds per dollar during the past few hours.
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Gold is moving in Egypt
Gold prices in Egypt have increased significantly over the past few days due to the rise in the price of the dollar on the black market, in conjunction with expectations of a possible depreciation of the Egyptian pound once morest the dollar during the next few weeks.
Gold prices gained regarding 275 pounds during market transactions on Thursday and Friday, due to the rise in the price of the dollar in the parallel market to 40 pounds, and the gold market’s adoption of an exchange rate of 45 pounds to the dollar for hedging, according to the iSagha platform.
The 21 karat reached regarding 2420 pounds, despite the decline in the international ounce, while the “24 karat” reached 2766 pounds, and the 18 karat reached regarding 2075 pounds.
However, prices declined during today’s trading, as 21 karat is now regarding 2300 pounds per gram, while 24 karat is regarding 2629 pounds per gram. And 18 karat now records regarding 1971 pounds per gram.
Nady Naguib, former secretary of the Gold Division at the Cairo Chamber, said that the rise in demand, especially for raw gold and bullion, as well as the price of the dollar in the parallel market following the rise in inflation, is the main reason for the jump in the yellow metal.
While Saeed Imbaby, CEO of the “iSagha” platform for trading gold and jewelry via the Internet, expected that gold prices would continue to rise during the coming period with the continuation of the same factors, especially with a shortage in supply following some companies went to export raw gold to foreign markets to provide hard currency.
While Ihab Wassef, head of the gold and precious metals industry division at the Federation of Industries, attributed the reasons for the increase in prices in less than 48 hours to the decrease in market supply. He added that if the supply shortage persists, new increases are possible, indicating that the current demand is not high and normal, but it is offset by a significant shortage in supply.
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