Dubai, United Arab Emirates (CNN) – The price of the Egyptian pound fell once morest the dollar by 7.7% during trading on Wednesday, to record the green currency 29.63 pounds for purchase, and 29.76 pounds for sale at the Central Bank – to set a new record level – and for the pound to continue its downward journey once morest the dollar. By more than 100% since the decision to devalue the pound last March. Experts attributed the reasons for the decline to the Central Bank’s application of a flexible exchange rate system permanently in response to the requirements of the International Monetary Fund.
The price of the pound once morest foreign currencies witnessed fluctuations during the day’s dealings in Egyptian banks, as it started the day with a significant decline once morest the dollar to exceed the level of 32 pounds before it gradually rose once more to close at the level of 29.76 pounds for sale in the Central Bank of Egypt, and the Kuwaiti dinar jumped, the highest value currency once morest the pound, to Levels exceeded 106 pounds, before falling to the level of 97.3 pounds for sale.
Banking expert Hani Aboul Fotouh said that the Central Bank of Egypt applies a flexible exchange rate system permanently. To stop speculation on the dollar in the parallel market, which led to a significant decline in the price of the pound once morest the dollar today in banks, adding at the same time that the elimination of the parallel market requires foreign exchange and its availability in the market.
On October 27, the Central Bank of Egypt announced the implementation of a flexible exchange rate regime for the pound once morest other foreign currencies by means of supply and demand forces, in response to the requirements of the International Monetary Fund so that Egypt would obtain new financing to bridge the foreign exchange gap.
Aboul Fotouh expected, in exclusive statements to CNN in Arabic, that the price of the pound would fluctuate during the coming period until it takes control of the parallel market for the dollar, in light of the government’s insistence on applying a flexible exchange rate, noting that investment bank estimates expect the price of the dollar to range between 32-36 pounds during the first quarter of this year, before declining once more.
And as the International Monetary Fund announced, the Egyptian government made commitments in return for obtaining new financing from the fund, and these pledges included the central bank’s commitment to a flexible exchange rate on a permanent basis; To help mitigate external shocks and reduce the balance of payments deficit.
Hani Aboul Fotouh indicated that the depreciation of the pound will positively affect attracting foreign direct investment, which fears entering the Egyptian market as a result of the existence of a parallel market for the dollar. Through monetary policy tools, stressing the need for government intervention to control the markets to stop any attempts by traders to exploit prices exaggeratedly.
The annual inflation rate rose to 21.9% last December, reaching the highest level since 2017, and the core inflation rate reached 24.2% during the same month.
The banking expert talked regarding the role of high-yield bank savings certificates in confronting the parallel market for the dollar, provided that the Central Bank of Egypt does not interfere once more in exchange rate movements, and that banks provide dollar liquidity that meets the demands of customers’ needs, pointing at the same time to the government’s efforts to increase dollar revenues. And reduce its expenditures by rationalizing public spending, postponing dollar projects, setting priorities for imports, and increasing dollar earnings from export revenues.
Al-Ahly and Egypt Bank offered high-yield savings certificates for one year, with an interest of 25%, to be spent at the end of the certificate period, or with a return of 22.5%, to be spent monthly, and they have collected more than 100 billion pounds ($3.4 billion) since their launch on January 4, according to media statements. To the officials of the two banks – The Commercial International Bank offered a savings certificate with a return of 22.5% for a period of one and a half years.
Banking expert Mohamed Badra agreed with him that the drop in the price of the pound once morest the dollar came as a result of the Central Bank’s application of a flexible exchange rate system permanently, in response to the requirements of the International Monetary Fund. It should gradually rise near the level of 30 pounds, expecting the availability of dollar liquidity for banks from the local market during the coming period, due to the fear of dollar holders of its decline in banks.
Badra said, in exclusive statements to CNN in Arabic, that the elimination of the parallel market for the dollar requires the availability of dollar liquidity in local banks so that citizens do not have to obtain green currency from the black market.
The central bank’s net international reserves rose to $34 billion by the end of December 2022, an increase of $500 million over the previous November, according to central bank data.
