2023-08-13 18:31:05
Once once more, the price of gold in Egypt has witnessed a sudden rise in recent days, while one of those responsible for the yellow metal trade justifies the matter with “fear” of devaluing the local currency once more.
Lotfi Al-Munib, deputy head of the gold division at the Federation of Chambers of Commerce, attributed the rise in gold prices to the increased demand for it in the local market, according to the Cairo newspaper, Al-Shorouk, on Sunday.
Gold prices witnessed during Saturday’s trading, the last trading week, an increase of 250 pounds (regarding 8 dollars) per gram, bringing the price of a 21-carat gram to regarding 2400 pounds (regarding 78 dollars), compared to 2150 pounds in the morning of last Thursday’s trading.
Al-Munib considered that the price of gold is determined according to two variables, which are the price of an ounce in the global market, and the exchange rate of the dollar locally.
He continued, “There may be fear of currency devaluation, which prompted consumers to rush to buy gold to preserve their savings,” according to Al-Shorouk.
A few days ago, the Central Bank of Egypt announced a 100 basis point hike in interest rates “to avoid inflationary pressures and control inflation expectations.”
The move to raise interest rates by the Central Bank came in a “surprising” way and contrary to the expectations of analysts on a large scale, according to Archyde.com.
The move comes amid annual inflation rising in June to a new record of 36.8 percent, driven by high food prices in a country experiencing an economic crisis due to a shortage of foreign exchange.
However, raising interest once more with the aim of curbing the ongoing inflation in Egypt opens the door to questions regarding the possibility of a new devaluation of the pound, a measure required by the International Monetary Fund to disburse a $3 billion loan.
Egyptian President Abdel Fattah El-Sisi implicitly ruled out devaluing the currency anytime soon, in statements he made last June, saying that “such a step might harm national security and citizens.”
Al-Sisi added in those statements: “We are flexible on it… but when the issue is exposed to Egypt’s national security… and that the Egyptian people are lost… no, no, no, no.”
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