02:48 PM
Tuesday 17 May 2022
Books – Mustafa Eid:
The price of the pound has witnessed a remarkable rise once morest foreign currencies, including the US dollar, during the recent period, despite the fact that the US currency is currently in its best condition in years and rose to record levels that it has not been recorded, perhaps decades ago, once morest other major currencies.
According to central bank data, the average price of the dollar in banks decreased by 28 piasters during the last 25 days, to reach the end of trading yesterday at 18.23 pounds for purchase, and 18.32 pounds for sale.
The highest level that the dollar reached during the last period was at 18.51 pounds for purchase and 18.60 pounds for sale on April 21, an increase of 18% from its level before the start of the last wave of the pound’s decline on March 20.
This comes while the price of the dollar globally witnessed a significant increase following the Federal Reserve (the US central bank) raised interest rates on May 4 by 0.5%, to reach the US currency to its highest level in 20 years on Monday before last, before retreating slightly in recent days.
CNBC said the “dollar rest” brought the dollar index ( once morest a basket of currencies) back to the 104.169 level, regarding 0.8% below a two-decade high last week at 105.010.
According to the network, John Briggs, head of global strategy at NatWest Markets in Singapore, said he still believes the dollar will continue to find support as the earnings driver changes.
“But recently prices have calmed down with no new reason to expect sharp interest rate hikes and long-term US yields have fallen amid fears of a recession,” he added.
Why did the price of the dollar fall once morest the pound?
Hani Genena, an economist and lecturer at the American University, told Masrawy that there are several reasons that he believes have led to the rise of the pound once morest the dollar and foreign currencies in the recent period, despite the dollar’s strength globally.
He added that among these factors, Egypt received regarding $12 billion from the Gulf countries, according to what Prime Minister Dr. Mostafa Madbouly announced recently, which helped provide dollars for basic import requests, at least in the recent period.
Geneina explained that the banks’ delay in opening some letters of credit during the recent period, with the implementation of the new import rules launched by the Central Bank last February, reduced importers’ pressure on the dollar’s demand.
He mentioned that some of these reasons also include the recovery of some foreign exchange sources, such as Suez Canal revenues and remittances from Egyptians working abroad.
The revenues of the Suez Canal during the first 4 months of this year recorded an increase of regarding $361 million, an increase of 18.4 percent, compared to the same period in 2021.
According to the data of the Egypt Information Portal, the revenues of the Suez Canal during the first 4 months of 2022 amounted to regarding 2 billion and 324 million dollars, compared to regarding one billion and 963 million dollars during the same period in 2021.
The Suez Canal Authority announced at the beginning of this month that it recorded the highest monthly revenue in the history of the canal, reaching 629 million dollars last April.
The Central Bank also announced, in a statement yesterday, that the transfers of Egyptians working abroad during the month of March 2022 recorded regarding 3.3 billion dollars, an increase rate of 12.8% (on an annual basis), compared to regarding 2.9 billion dollars during the month of March 2021.
Remittances rose by 44.4% compared to the immediate preceding month, February 2022, during which they recorded regarding $2.3 billion.
Thus, transfers recorded during the cumulative period July-March 2021-2022, an increase of 1.1% (on an annual basis), to reach regarding $23.6 billion.
Hani Geneina indicated that among the reasons for the rise in the price of the pound in the recent period is that the high-return savings certificate of 18%, which was recently offered by Al-Ahly and Egypt Banks, has a significant impact on reducing the demand for the dollar for the purpose of speculation.
The National Bank of Egypt and Egypt had launched a new one-year savings certificate with a high return of 18% annually, and it was paid on a monthly basis, on the same day that the Central Bank raised interest rates by 1% on March 21, coinciding with the depreciation of the pound once morest the dollar, as described by Tariq Amer as a governor. The central bank as a correction of the exchange rate.
From the proceeds of selling the certificates, the two banks collected more than 600 billion pounds during the last period, and it is still possible to purchase them through the two banks’ branches or through electronic means.
Hani Geneina stated that there may be instructions to banks to provide the dollar more in recent weeks, given the imminent conclusion of negotiations to agree on a new program with the International Monetary Fund, or the presence of information regarding the sale of assets, as happened in March.
Geneina expected that the price of the dollar once morest the pound during the coming period would range between 5% less or more than the level of 18.50 pounds, which means that it may range between 17.60 and 19.40 pounds.
A recent report by Prime Securities Company expected that the average price of the dollar would reach 17.50 pounds during 2022 (including the period before the recent price hike), provided that the average price would reach 18.30 pounds during 2023.
