The institution explained that there are two scenarios for the exchange rate, one optimistic and the other pessimistic, according to the development path of escalating tensions in the region.
The optimistic scenario relies on a rapid calm, such as a ceasefire in Gaza, which would cause a positive shock to the Egyptian pound by paving the way for a (gradual) return of navigation in the Red Sea and creating an upward trend for the tourism sector.
This would cause the pound to strengthen towards its previous forecast range of 46.50 to 48.50 pounds per dollar.
Fitch Solutions expected that the escalation of the current round of tension between Israel and the Palestinian factions would be reflected in the weakness of the value of the pound against the dollar to less than 49.50 pounds and perhaps reaching 55.00 pounds per dollar in the short term.
According to the institution, “outward flows of investment portfolios will cause banks’ net foreign assets to return to negative, and foreign exchange reserves to decline.”
Last Monday witnessed an outflow of indirect foreign investment from treasury bills amid fears of escalating tensions in the region between Israel and Iran.
Prime Minister Dr. Mostafa Madbouly said in a previous press conference that last Monday witnessed a small exit of foreign investment, amounting to about 7% of the total, and the exit was financed without affecting the foreign exchange reserve, which led to flexibility in the exchange rate.
Egypt attracted about $22 billion during the first two months of the exchange rate liberalization in March and April, bringing the total portfolio to a record $35.4 billion for the first time in its history, according to data issued by the Central Bank earlier.
Source: Masrawy
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2024-08-13 18:27:29
