After a record 27 pounds. Will the dollar break the “infinity” barriers in Egypt?
The dollar rose against the Egyptian pound by about 2.40 pounds over the past two days in various public and private banks as it broke the 27 pounds barrier for the first time in history.
This was due to a lack of liquidity in the banking sector and an increase in demand for foreign exchange, and the price of the pound is expected to continue to decline until it reaches a fair price in accordance with the supply and demand mechanism. .
For his part, Dr. Ahmed Shawki, an economist, confirmed that it is difficult to say unequivocally whether the price of the dollar has reached a certain level, explaining that the Central Bank has completely liberalized the exchange rate during the last period, and now the flexible market mechanism is working, so how the price of a currency is determined by supply and demand.
Shawkey added that the currency’s rise should have coincided with the return of imports and the release of goods in ports, as this puts pressure on the currency as a result of Egypt being an importing country in the first place.
The economist pointed out that the currency’s appreciation will continue for a short period and will not last long as the country looks forward to receiving the second tranche of the International Monetary Fund loan in addition to $1 billion from the Sustainable Development Fund. as well as the investments that will follow the loan.
Shawkey went on to say that the price of the dollar in banks approached its price in the parallel market, which represented a crisis as a result of the existence of two prices per pound, pointing out that in light of the global crisis, imports had to be reduced. and is only open for essential goods.
In the same context, Dr. Sahar El-Damati, a banking expert, said that it is difficult to predict the level at which the price of the dollar will stop, as it depends on the market and the mechanism of supply and demand. It is a flexible market mechanism followed by a central bank.
Ad-Damati added that the devaluation of the currency is taking place in a balanced way, as the pace of the pound’s fall has not reached 10% in two days, which indicates that the Central Bank is monitoring this issue in order to reach a certain level.
The banking expert pointed out that Egypt has paid off about $9.5 billion of debt over the latest period, while the central bank’s reserves have increased to $34 billion. This indicates that there is no crisis in the provision of foreign exchange, highlighting that this move contributes to achieving a fair price for the pound and providing foreign exchange for imports.
The expert said that Egypt’s agreement with the International Monetary Fund to receive new funding includes several areas, including: exchange rate flexibility, inflation control and a social umbrella to help people most in need.
She pointed out that the devaluation of the currency is an additional step to the decision of the Central Bank to cancel work with documentary letters of credit and return to work with collection documents in order to provide importers with foreign currency for the import and entry of goods into ports.
And the price of the dollar in the Central Bank of Egypt by the end of trading today, Thursday, reached 27.01 pounds to buy and about 27.11 pounds to sell.
Source: Cairo 24