Egypt has been facing a dollar-saving crisis for a long time, with anticipation of the implementation and results of the first review of its economic program with the International Monetary Fund, which was expected to start in mid-March.
These revisions and anticipation, in addition to the fact that the government’s offering program is “faltering”, put the pound under more pressure regarding the intention to liberalize the exchange rate once more.
Dollar price forecast in Egypt
The result of the pressures on the Egyptian currency is reflected in its decline in futures contracts for a period of 12 months, in which the dollar rose to the level of 43 pounds. Exchange in 2016 seven years ago.
Egyptian bonds that are dealt with in dollars also declined, including standard bonds due following two years, while the Ministry of Finance is facing difficulties in selling treasury bills, as it receives purchase orders submitted by investors at an interest rate of up to 25.5%, which is a large return.
Markets and investors are awaiting a new decline in the pound once morest the dollar, coinciding with the assertions and claims of the International Monetary Fund that depreciating the pound is a key factor in stabilizing the Egyptian economy.
The price of the dollar is rising on the black market, where it trades between 35-36 pounds, while its price is stable in official banks operating in the government and private sectors, where it is regarding 31 pounds.
Within the terms of the International Monetary Fund and its program to support dollar flows to Egypt, the government announced the offering of stakes in 32 companies and banks, and despite that, it has not announced major deals within the program yet.
Hani Genena, an economic analyst and lecturer at the American University, commented on data published by the International Monetary Fund in its report issued this week regarding the fund’s expectations for the exchange rate of the dollar once morest the pound for the coming years, saying that the fund does not publish explicit expectations of the exchange rate explicitly, but it can be calculated using a calculation that depends. On nominal domestic product denominated in pounds and US currency.
The economic analyst said that by applying the calculation to the data available in the International Monetary Fund report, the expected average exchange rate during the current fiscal year is to reach 25.8 pounds per dollar, then rise once more over the next fiscal years, to reach 33.5 pounds per dollar in 2024. Then to 35.5 pounds to the dollar in 2024-2025.
In its report, the International Monetary Fund expects the average price of the dollar to rise to 37.2 pounds per dollar by June 2026, then reach 38 pounds in the fiscal year 2026-2027, and then to 39.6 pounds per dollar in the next 2028.
With the exception of the next fiscal year, the International Monetary Fund expects the annual decline in the exchange rate of the Egyptian pound once morest the dollar to stabilize at a rate of 3 to 6 percent annually, which is roughly the inflation difference between Egypt and America, according to Genena.
It is noteworthy that the annual inflation rate in Egypt rose during the month of March to 33.9%, and it was recorded in cities by regarding 32.7%, while the annual inflation rate in America during the month of March was regarding 5%.
Geneina said that the International Monetary Fund’s expectations depend on the Central Bank achieving its inflation target at the end of next year, which will be evident through the continued decline in the growth of the money supply during the coming months.
Earlier, the Central Bank set new targets for the inflation rate, following exceeding the targets announced at the end of 2022, which were set at 7% (±2%), which is the same target during the fourth quarter of next year 2024.
