Fastest News Updates around the World

What contribution did the Arab countries make to stop the loss of the dollar by Egypt after the liberalization of the exchange rate?


- Advertisement -

Egypt is currently suffering from a major crisis over the dollar, as it tries to get out of the crisis in several ways, while the black market controls the American green.

Egyptian economic analyst Hanan Ramses said in statements to RT that Egypt is trying to handle the dollar crisis with as much wisdom as possible to get through the current crisis. International Monetary Fund loans are no longer the ideal solution due to the conditions the fund asks to implement and comply with, some of which Egypt has been able to implement, and to distance itself from some of them due to their harmful impact on the most needy groups and social solidarity programs.

Ramses explained that the liberalization of the exchange rate, which the state carried out last week, influenced the movement of the pound against the dollar, as the pound fell by 8% in one session, and the price of the dollar reached 32 pounds the day before. movements of dealers on demand to sell dollars in order to enter savings vessels with a return of up to 25%, which was created by national banks to attract more dollars to enter these pools.

Ramses pointed out that the government offered treasury bills and they were fully covered due to the high cost of their yield, and many Arab countries sought to keep their dollar deposits in the Central Bank until 2026, which contributed to the stability of the exchange rate and the gradual decline in the price of the dollar to those until it hit the $29 cap with an LE 150 billion subsidy initiative to support industry and manufacturing sectors in Egypt for a period of 5 years at a relatively low interest rate compared to the interest rate. prevails in banks.

Egypt was not satisfied with all these measures, but the Central Bank returned to promoting the operation of the derivatives mechanism, which operated for years, and then was discontinued, and this is just a non-deliverable mechanism of local contracts for the pound, as derivatives are a method that ensures the entry and exit of investments in dollars in their value without the risk of loss due to fluctuations. The exchange rate, through which a specific price for a currency is set in the future, and the difference between the agreed contract price and the spot market price is calculated at the time of collection against the risks of exchange rate fluctuation due to placement, which means freedom of circulation of currency due to the forces of supply and demand.

Ramses pointed out that Egypt is in dire need of increasing its export potential to $100 billion in order to be able to complete its various industrial, agricultural, tourism and construction development projects in the face of a steady population growth and accommodate a large number of residents. , whether from countries suffering from severe economic and political crises, or from countries that depend on Egypt as an important destination for education, healthcare and medical treatment.

Source: RT

Cairo – Nasser Hatem

Leave a Reply

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More