2023-07-30 09:08:09
Sunday, 07-30-2023 12:07 PM
Contrary to the scenario expected by some analysts and reports, Goldman Sachs, one of the largest global US banks, rules out a new devaluation of the pound in banks, at least in the near term, given the concerns of the authorities regarding the weakness of the pound and its impact on inflation.
Goldman Sachs expected, in a new report, that this would lead to the consolidation of the work of the parallel market for the dollar (the black market) in Egypt, especially with its expectation that the government would continue its current policy of pressure on imports through informal controls on the exchange rate, and, if necessary, calm investment pace.
Exchange market observers said that the price of the dollar on the black market ranged between 38 and 38.5 pounds, compared to an average of 30.94 pounds in banks, which is regarding 7.5 pounds less.
In the report, the bank said that the continued operation of the black market increases the risks of exacerbating the related distortions in the economy that have emerged in recent months, defining them in 6 factors, namely:
– Decreased liquidity of foreign currencies in the official market.
– Increasing dollarization and hoarding of foreign currencies by Egyptians as a precaution once morest the decline in the currency price and high inflation.
– Supply chain disruptions and higher operational risks.
Low investment (domestic and foreign).
Unequal access to foreign exchange liquidity and competitive distortions.
Real inflation of assets.
Goldman Sachs said that, despite the progress made by the Egyptian government in selling state-owned assets within the offering program, it does not believe that Egypt will reduce the real exchange rate of the pound once morest the dollar, at least in the near term, due to the authorities’ concerns regarding the weakness of the pound and its impact on inflation. .
The bank added that these expectations reflect the “confusion” scenario, in which the authorities proceed at a measured pace with regard to implementing reform while continuing to balance between their foreign currency needs in the country and financing opportunities.
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