Dubai, United Arab Emirates (CNN) – The exchange rate of the pound against the dollar fell by more than 22% within 3 days of implementing a flexible exchange system, so much so that the dollar registered 24.05 pounds per dollar. ‘purchase and 24.18 for sale at the Central Bank. Experts believe this decline will continue until it receives the first installment of the International Monetary Fund loan.
The Central Bank of Egypt announced on Thursday the implementation of a flexible exchange rate system for the pound against other foreign currencies, as part of a package of reform measures that have been adopted to ensure macroeconomic stability and achieve sustainable and global economic growth. credits in import financing transactions.
CI Capital Investment Bank’s co-head of research department Monsef Morsi said the central bank implemented a system late last week to determine the value of the Egyptian pound’s exchange rate against other foreign currencies by of supply and demand forces, which caused its decline against the dollar to exceed the £ 24 level, adding: “It is premature to expect to what extent the dollar’s rise will continue at any level, even banks that operating in the local market are currently working to limit their requests for foreign currency and their available dollar resources. “
The Central Bank of Egypt moved to implement a flexible exchange rate system for the pound, in response to the requirements of the International Monetary Fund, which provided a $ 3 billion loan to Egypt as part of a financing package $ 9 billion to meet the split country’s exchange rates.
Morsi predicts, in exclusive statements to CNN in Arabic, that the stability of the dollar against the pound will not occur before the beginning of next year.
The rest of the foreign currencies saw an increase against the Egyptian pound and the average exchange rate of the euro recorded 23.89 pounds for the purchase, 24.03 pounds for the sale, the Saudi riyal 6.40 pounds for the purchase, 6.43 pounds for the sale, the Kuwaiti dinar 77.63 pounds for the purchase, and 78.16 pounds for sale, at the Central Bank At the end of October trading.
On the repercussions of the continued increase in the price of the dollar against the pound, Moncef Morsi said that it will affect the increase in prices, and therefore will be reflected in the increase in the rate of inflation, but at the same time in the depreciation of the pound will contribute positively to companies. who produce export-oriented products, as it will represent a competitive advantage in the price of their products and open new markets.
The annual inflation of consumer prices in Egyptian cities last September reached the highest level in the last 4 years, reaching 15%.
Morsi added that the continued improvement in the currency supply will lead to the stability of the exchange rate of the pound against the dollar, and this is expected to be achieved in the next period, following the approval of the Board of Directors of the International Monetary Fund a lending to Egypt, and the country received the first payments from the Fund and other parties, including This will lead to exchange rate stability.
Egypt has reached an expert-level agreement with the International Monetary Fund to obtain a loan of $ 3 billion for a period of 46 months under the extended fund facilitation mechanism, with the aim of controlling the balance of payments, supporting the general budget of the Egyptian state and stimulating obtaining additional funding from Egypt’s international and regional partners to maintain economic stability, according to an official statement.
Banking expert, Hani Aboul Fotouh, said that the exchange rate of the pound against the dollar has decreased from the application of a flexible system in the determination of the exchange rate, due to the strong demand for the dollar, and this decline in the dollar. sterling will continue until additional foreign exchange resources are available to balance supply with demand, and this will be achieved within days or weeks, indicating the role of high-yield savings certificates offered by some government banks, which will encourage some dollar holders abandon it in exchange for purchasing these certificates.
Al-Ahly Bank and Egypt issued three-year savings bonds with an annual yield of 17.25%, and also decided to raise the interest rate on the 3-year platinum certificate to achieve a yield of 16% , as of today, for new or automatically renewed certificates.
Aboul Fotouh added, in exclusive statements to CNN in Arabic, that the high-yield savings certificates will also help increase the volume of Egyptians’ remittances overseas, which has decreased significantly in the past two months, pending the decision to liberalize. the exchange rate, adding that it is difficult to set a target price for the Egyptian pound against the dollar, as confirmed on several occasions by Egyptian Central Bank officials.
The value of Egyptian remittances overseas fell last July to reach $ 2.38 billion, up from $ 2.79 billion in the same month last year and up from $ 2.8 billion in June, according to official data. .
Hani Aboul Fotouh highlighted the need for the state to intervene to tighten control over the prices of commodities which are expected to rise in the next period after the dollar price rises against the pound, to protect citizens from any unwarranted increase by some traders, and at the same time they encourage the exploitation of the decline in the pound to increase Egyptian exports, while working to reduce the repercussions of the increase in the import bill and the value of debt.
