Dollar and Egyptian pound (iStock)
Egyptian Pound
He approached the level of 31 pounds
The exchange rate of the US dollar recorded slight increases against the Egyptian pound in recent transactions, to gradually approach the official market from the level of 31 pounds.
With the Central Bank of Egypt, the exchange rate of the dollar rose to the level of 30.84 pounds for purchase, compared to 30.96 pounds for sale. In Abu Dhabi Islamic Bank, the exchange rate of the dollar increased to about 30.88 pounds for purchase, compared to about 30.93 pounds for sale.
In 22 banks led by the Commercial International Bank of Egypt and Banque du Caire, the exchange rate of the dollar rose to about 30.85 pounds for purchase, compared to 30.95 pounds for sale. The lowest dollar exchange rate came in 3 banks, led by the National Bank of Egypt and Banque Misr, at 30.75 pounds for purchase, and 30.85 pounds for sale.
On the other hand, the black market witnessed intense activity during recent transactions, with the return of demand for the dollar. According to dealers, the exchange rate of the dollar in the parallel market recorded prices ranging between 34 and 35 pounds, while operations are carried out in a limited manner and on narrow scales.
The return of the black market comes with successive expectations of international banks that the price of the pound against the dollar will be officially reduced.
The last of these expectations was from Societe Generale Bank, which saw that Egypt would devalue the pound again in the near future.
Egypt needs a cheaper currency
The bank indicated that the pound may end the current quarter below its current levels by about 10%, as Egypt will need a cheaper currency, given the large current account deficit and dollar shortage.
He continued, “Although the pound has lost 50% over the past year after devaluing it three times, the currency has not yet reached a balanced short-term exchange rate.”
The recent rises also included, in addition to the dollar, other currencies, as the single European currency recorded increases ranging from 2 to 10 piasters. In the National Bank of Egypt and Banque Misr, the exchange rate of the euro rose to 32.40 pounds for purchase, and 32.64 pounds for sale. At the Central Bank of Egypt, the exchange rate of the euro rose to about 32.58 pounds for purchase, and 32.68 pounds for sale.
The pound sterling recorded an increase with the banks of the National Bank and Banque Misr, to about 36.38 pounds for purchase, and 36.71 pounds for sale. The Central Bank of Egypt reached a level of 36.64 pounds for purchase, and 36.77 pounds for sale.
Societe Generale analysts expect it to end the current quarter at 34 per dollar, compared to Friday’s price of 30.62 per dollar.
Rebuilding reserves
Analysts at Societe Generale added that with the return of portfolio inflows, the central bank will need to prioritize rebuilding its foreign currency reserves, which will put additional pressure on the pound.
And in the Arab world, the exchange rate of the Saudi riyal rose to the level of 8.18 pounds for purchase, and 8.21 pounds for sale. The exchange rate of the UAE dirham also rose to the level of 8.37 pounds for purchase, and 8.39 pounds for sale. Also, the exchange rate of the Kuwaiti dinar increased to the level of 96.74 pounds for purchase, 100.43 pounds for sale.
While the Egyptian government is moving intensively in the issue of providing hard currency, the Egyptian Stock Exchange is studying the temporary registration of four companies. Assuming the completion of the listing, the total number of companies temporarily listed on the Egyptian Stock Exchange will rise to seven. The Financial Regulatory Authority had made amendments to the listing rules last September, allowing companies to temporarily list their shares on the stock exchange for a period of six months, provided that the listing and offering requirements are completed during that period.
The losses that have dogged the Egyptian pound since last year have caused inflation to continue to rise. According to the data of the Statistics Authority, the annual inflation rate rose to 32.9% last February. However, central bank data indicates that the annual rate rose to 40.3% over the past month.
Foreign investments in treasury bills
Despite the series of crises facing the Egyptian economy, the data indicates a decline in the external debt balance by $700 million, or 0.05%, at the end of last September, recording $155 billion, compared to June 2022 data.
Egypt paid about $4.8 billion in debt service during the first quarter of the fiscal year 2022/23, which includes installments of $3.2 billion, in addition to $1.6 billion in debt interest.
At the same time, the volume of foreign investments in government treasury bills increased last December to reach about 199.5 billion pounds, compared to about 160.2 billion pounds at the end of the previous November, with a growth rate of about 24.5%.