After the decisions of the Central Bank of Egypt yesterday, and its moves to control the performance of the exchange market, experts, analysts and investment banks suggested that the market would tend to stabilize during the coming period, especially after the government-affiliated banks issued investment certificates with a high annual return of 25%, in addition to narrowing the gap between exchange rates. The dollar between the official and black markets.
Banks previously launched similar savings certificates last March, coinciding with the Central Bank of Egypt’s approval of the first significant increase in the dollar exchange rate during the extraordinary meeting it held in March of last year.
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These certificates, which have been available to customers for about two months, were able to attract deposits worth 750 billion pounds, which is what the Central Bank of Egypt and banks are betting on in issuing the latest certificates.
It was not immediately clear whether Wednesday’s drop represented the expected transition to the flexible exchange rate regime, said Mohamed Abu Basha, senior macroeconomic analyst at EFG-Hermes.
Abu Basha added, according to a report published by the “Financial Times” newspaper and viewed by Al Arabiya.net: “To judge this, we need to monitor the level at which the currency will eventually stabilize, and to what extent this will improve the liquidity of foreign currencies in banks and what If we are going to see more volatility in the pound in the future.”
Abu Basha said that he would “wait and see” the level of foreign currency liquidity in the interbank market, according to Bloomberg.
“There is a lot of confusion now about whether we have a truly flexible exchange rate regime,” said Farouk Sousse, an economist at Goldman Sachs Group in London. He added, “It has not been tested whether the pound will be more resilient in the face of external shocks in the future, and whether it acts as an automatic stabilizing factor for external accounts.”
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He added, “Whether this leads to a solution to the foreign exchange liquidity problems that Egypt faces will depend on whether we will see large inflows of foreign currencies in the near term … The solution is to standardize exchange rates, which will require the completion of all foreign exchange requests.” accumulated and unmet demand for future foreign exchange,” according to Archyde.com.
Commenting on the recent decision to increase the exchange rate of the dollar against the Egyptian pound, Monica Malik, senior analyst at Abu Dhabi Islamic Bank, told Bloomberg that it is a new cut and not a complete flotation of the Egyptian pound against the dollar, adding, “It stems from the big difference between the official market price.” And parallel, which increased the scarcity and lack of foreign currency liquidity.
In conjunction with these steps; The Central Bank of Egypt continues to release goods accumulated in Egyptian ports, especially after the end of the documentary credits mechanism since the beginning of this year. The value of imports that exited Egyptian ports since the beginning of last December rose to $6.8 billion, from $6 billion at the beginning of this week, according to a recent statement by the Egyptian Cabinet. However, the statement did not reveal the value of the goods that are still outstanding, while the government estimated it last week at about $9.5 billion on December 25.
In his comment, the economist, Hani Genena, expected dollar cash flows during the next 3 weeks, noting that the fair price of the dollar ranges between 26 and 28 pounds. In his statements yesterday, he said that the timing of issuing a savings certificate with an annual return of about 25%, and then the movement of the dollar exchange rate, is a good step within the framework of the dollar saving moves in the official market.