2023-05-12 15:00:57
There has been much talk recently and expectations about the future of the Egyptian pound against the dollar in light of the global economic pressures that have negatively affected the economies of the developing country, and that the Central Bank of Egypt will announce a new devaluation of the local currency in light of the current conditions and the measures that Egypt is implementing in response to the demands of the International Monetary Fund and that this will be at its next meeting.
Amidst this confusion about the future of the pound against the dollar, Citigroup, a banking group, expected that the central bank might resort to delaying decreasing the price of the pound against the dollar, until at least the end of next month, which prompted traders to lower their expectations about the flotation.
The Egyptian pound against the dollar
Credit rating institutions are calling on the Egyptian government for a more flexible exchange rate, which reflects the country’s external financing needs, according to the mechanism of supply and demand, which is also a major requirement for the International Monetary Fund, since it signed a financing agreement with Egypt of $3 billion at the end of last year, a segment of which was disbursed. One and waiting for the first review to be able to disburse the second tranche, a procedure that was scheduled for mid-March.
According to what Bloomberg quoted Luis Costa, head of markets strategy for Central and Eastern Europe, the Middle East and Africa at Citigroup in a note, allowing another sharp decline in the pound before the end of the Egyptian fiscal year ending on June 30, may hinder the government’s goal of reducing the budget deficit. 6.5% and fixing the debt-to-GDP ratio.
Costa said, “The Central Bank of Egypt will likely wait for the abundant tourism revenues of about $14 billion to liquidate the economy before deciding on the need for another revaluation of the pound,” according to Bloomberg.
It is likely that the Central Bank of Egypt will not undertake another strong devaluation of the pound in the next month or so, Costa said in the note.
A lot of speculation indicates that a new devaluation of the currency is approaching for the fourth time since March 2022, when the Central Bank allowed the devaluation of the local currency against the dollar, which is currently circulating in the official sector by more than 30 pounds, while the parallel market price increased between 38 and 40 pounds, but Citigroup, sees Despite this speculation, traders have reduced their bets in the past two weeks.
Flexible foreign exchange rate application
A senior official said International Monetary Fund This month the government is “serious” about implementing a flexible foreign exchange rate, according to Bloomberg.
The Gulf countries are waiting for more certainty about the currency before they fulfill their promises to provide billions of dollars in investments, while the government sought to attract $2 billion from the implementation of the offering program before the end of the current fiscal year, that is, by the end of June.
Ahmed Khattab, an economist, said that the decision to devalue the Egyptian pound against the dollar is not the decision of the Central Bank alone, noting that it is a strategic decision governed by several factors and several other ministries, and the Central Bank is the only one to announce the decision, and there are many matters that are discussed before making that decision, including The extent of the state’s need for dollar currencies and the urgent need to save dollars, and this happens when the state pays its obligations abroad, so it needs dollars.
Khattab added – during statements to “Echo of the Country”, that the decision to exempt gold will reduce the gap between the dollar and the pound, explaining that to increase the value of the pound, it is necessary to increase our exports to save dollars, and this is what the Egyptian state has recently succeeded in, in addition to that attention must also be paid to the sector. tourism.
Khattab said, “It is not possible to say with certainty that the government will announce floatAnd we have to wait, as everything that happens in the Egyptian market, the economic gap, or even inflation is a natural result of the Russian-Ukrainian crisis, and if diplomatic negotiation takes place between the two countries, the pound will rise again against the dollar, as tourism will activate and the Russians and Ukrainians will come to it. .
Devaluation of the Egyptian pound
He concluded: Egypt’s oil and agricultural exports have increased, and this indicates that Egypt’s economy is functioning properly, noting that the currency price or currency depreciation does not determine the strength of its economy, but growth rates and investments are determined, and this is clearly evident in Egypt.
The Central Bank is scheduled to meet, on Thursday, May 18, 2023, to set the interest rate for the next period until June 22, 2023, especially since the Monetary Policy Committee at the Central Bank convenes every 6 weeks.
According to the announced schedule of the Central Bank’s meetings for this year, there are 8 meetings that will be held during 2023; The date for the third meeting will be on May 18, 2023, and the fourth meeting will be followed on the 22nd of June. central bank About 4 meetings were held in the first half of the year, and the fifth meeting will be held on August 3, 2023, and the sixth meeting on September 21, 2023, and the seventh meeting on November 2, 2023, and the eighth and final meeting on December 21.
The price of the US dollar against the Egyptian pound, according to Central Bank data, recorded the end of trading on Thursday, May 11, 30.83 pounds for purchase, 30.93 for sale.
1683919201
#surprise #Egyptian #pound #billion #revive #state #treasury. #happening