Egyptian pound dollar
Egyptian Pound
Inflation rates in Egypt’s cities reached 31.9% in February
Today marks the anniversary of the extraordinary meeting held by the Central Bank of Egypt on March 21 of last year, in which it announced the start of intensive action to contain the dollar scarcity crisis, and announced its first measures to combat high inflation.
The moves included what was approved by the Monetary Policy Committee at the time to raise interest rates by 100 basis points, to reach 9.25%, 10.25%, and 9.75%, respectively, and the credit and discount rates were raised by 100 basis points, to reach 9.75%. He also decided to start decreasing the price of the Egyptian pound once morest the dollar, to reach the fair price for the exchange of the dollar in the Egyptian market.
Intense activity in the black market, with the return of speculation on the dollar in Egypt
But during the Monetary Policy Committee meetings held over the past year, interest rates were raised by 800 basis points to 17.25% on lending and 16.25% on deposit. It also raised the cash reserve ratio that banks are obligated to keep with the Central Bank by 400 basis points in September 2022.
How did the inflation rate move?
In parallel with the reduction of the Egyptian price, banks affiliated with the Egyptian government announced the issuance of investment certificates with a high return of regarding 18%. Within two months, these certificates were able to collect regarding 750 billion pounds, in the context of fighting inflation and reducing the amount of liquidity available in the Egyptian market.
With regard to inflation, and despite a series of measures announced by the Central Bank of Egypt over the past year, the data indicates an increase in the core inflation rate during the month of February, which exceeded expectations, reaching 40.26%, on an annual basis, which is the highest level in the world. Its date, according to the data available on the Central Bank of Egypt website.
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The annual consumer price inflation in Egypt’s cities rose more than expected to 31.9% in February, the highest level in five and a half years, from 25.8% in January.
On the other hand, the annual inflation rate was 10% during February of last year. While the annual inflation rate recorded a level of 8.8%, which indicates the continuation of the harsh inflationary wave facing the country during the last 12 months.
Has the dollar reached a fair price?
In the exchange market, and with regard to the changes it witnessed since the first quarter of last year, the first move of the Central Bank in the exchange market was during the extraordinary meeting held in March of last year, when it was decided to increase the exchange rate of the dollar once morest the Egyptian pound by 25.2% following raising the exchange rate Exchange rate from 15.77 pounds to regarding 19.64 pounds.
The second move was in the last week of October last year, when it was decided to raise the dollar exchange rate by 22.8%, so that the dollar exchange rate jumped from the level of 19.74 pounds to regarding 24.25 pounds. The third move came on the first of last December, when it was decided to raise the exchange rate of the dollar by 12.2%, to increase the exchange rate of the dollar to the level of 27.20 pounds.
And on January 4, the last move came, when it was decided to raise the exchange rate of the dollar by 13.8%, and since that time, the dollar has continued to rise to be traded at the present time at the level of 30.95 pounds.
Pound futures contracts exceed 39 once morest the dollar…and the black market is on fire once more!
However, since the March movements of last year until the recent dealings, the exchange rate of the US dollar once morest the Egyptian pound jumped by 96.25%, making the dollar gain regarding 15.18 pounds, following the exchange rate rose from the level of 15.77 pounds before the March movements of last year, to regarding 30.95 pounds in present time.
Despite the record rise in the dollar exchange rate, expectations indicate that the Egyptian pound will continue to decline once morest the dollar. Credit Suisse had suggested that the pound would decline in the coming period in the short term, raising the dollar exchange rate to a level of 35 pounds.
On the other hand, Societe Generale expected that the price of the dollar would reach 34 pounds in the short term by the end of March. Also, HSBC Bank said that its expectations indicate that the exchange rate of the dollar will range between 30 and 35 pounds, and set the average price at the level of 32 pounds.
