The US dollar rose sharply against Egyptian Pound As the dollar reached 32 pounds, the Egyptian currency recorded its largest daily decline since October in yesterday’s trading, Wednesday, and the pound is now trading at half its price in the market compared to last March, after the Central Bank intervened for the third time within the framework of a loan agreement from the International Monetary Fund.
The deterioration of the pound led to a cascade of comments from major investment banks and international institutions. According to Goldman Sachs, the Egyptian authorities must now ensure that the demand for foreign currencies is met in the official market, thus unifying the exchange rate and eliminating the parallel market.
For its part, Standard Chartered Bank stated that the Egyptian pound will remain under pressure until more dollar inflows are achieved, which will balance supply and demand for foreign exchange and until the gap with the parallel market is closed.
As for the Abu Dhabi Commercial Bank, it expects a further decline in the pound, indicating that Egypt’s recent policy may not be sufficient to attract private capital until the accumulated accumulation of foreign currency demand recedes, which will require dollar liquidity, and it is currently unclear where it will come from.
The International Monetary Fund has indicated that the Egyptian government must demonstrate the extent of its resilience in a flexible foreign exchange rate policy.
The Fund added that any intervention by the Central Bank of Egypt should be aimed at calming market fluctuations only and that it must withstand any pressure to reverse this policy.
The International Monetary Fund loan program, worth $3 billion over 46 months, is a drop in the $42 billion that Egypt needs to service its debts in the current fiscal year.
Egypt’s foreign exchange reserves amount to only $34 billion, compared to $41 billion last February, while its foreign debt has more than tripled in the past decade to $157 billion.