11:52 p.m
Tuesday 30 August 2022
I wrote – Manal Al-Masry:
Bankers said that the decline in the price of the euro against the dollar globally will not bring Egypt an abundance in the import bill for Egypt, as the strength of the dollar against the euro differs from its strength against the pound due to the instability of the local currency.
The bankers, who spoke to Masrawy, added that the central bank is already using a basket of different foreign currencies for import, but the greater pressure is on the dollar, and it is difficult to rely on the euro in light of the fact that most of the requests submitted by importers are in dollars, as well as the size of the low risk compared to any currency. other foreign.
The price of the euro fell against the dollar during the month of July, recording its lowest level in 20 years, due to the exposure of the euro currency during the past months to several crises that affected its levels, while the dollar was receiving more support due to the monetary policy in America.
The dollar received great support during the past months, with the US Federal Reserve raising interest rates more than once to control inflation for the first time since 1992.
The deputy head of international transactions in a foreign bank told Masrawy that Egypt relies on a basket of different foreign currencies for imports, but most of the uses are made through the dollar more as a result of the nature of imports and by virtue of the countries with which Egypt cooperates.
He added that the depreciation of the euro against the dollar will not bring abundance to the Egyptian pound due to the instability of the local currency and its decline, as happened to the rest of the world currencies against the green paper, in addition to the fact that the strength of the economy between Europe and America is different from Egypt.
The price of the euro against the pound had risen in recent months, after moving the exchange rate of the pound against foreign currencies significantly, starting from trading on March 21, but after it exceeded the level of 20 pounds, the average exchange rate of selling the euro in banks fell to 19.24 pounds today in banks.
The deputy head of international transactions in a foreign bank explained that the central bank’s dependence on a particular currency more than another in financing import operations has other dimensions and different accounts, including the degree of potential risks, especially the euro currency, which has become much more risky than before.
He pointed out that this risk is due to the current tensions due to the existence of the Russian-Ukrainian conflict in return for the low degree of dollar risk, which makes it undesirable to rely on the euro.
A board member of a private bank, who preferred not to be named, said that Egypt relies on the dollar currency to finance imports more than the euro or other currencies as a result of the volume of requests submitted for imports in the American currency, which makes the countries that Egypt deals with preferring to export through this currency. In addition, the volume of forward orders required from Egypt is in dollars more than any other currency.
He added that the dollar dominates most of the requests linked to its weight in the volume of international trade, and the much lower risk than any other currency at a time when Europe is suffering from the specter of war and major economic problems.
The source stated that the central bank relies on a basket of different currencies in the cash reserve to avoid the risk of focusing on the use of one currency, but the reliance on a particular currency more than the other in import depends on the volume of requests submitted from documentary credits for a period of 3 to 6 months and future and urgent requests .
The cash reserve at the Central Bank of Egypt consists of a basket of foreign currencies (the dollar, the euro, the British pound, the Swiss franc, the Japanese yen, the Chinese yuan, in addition to some Arab currencies), according to the Central Bank’s website.