Bloomberg agency said: “The Egyptian pound rose by 12% on the local black market over the past week, with the decline in demand for the US dollar, amid investors’ concern about the reversal of the coup against the IMF’s recommendations for a flexible currency system.”
The agency added that the pound was trading at about 37 to the dollar on Thursday, compared to 42 last Friday, according to many traders, and the currency may continue its gains in the coming days, said the people, who asked not to be identified.
And they said: “The demand for the dollar suddenly weakened, which prompted traders to reduce activity. The pound is trading at 30.9 per dollar on official channels through banks.”
The Russian invasion of Ukraine has hit the Egyptian economy hard, leading to huge increases in food and fuel prices and spurring the worst foreign exchange shortages in years. The coup authorities have devalued the pound three times since the first quarter of 2022, helping to secure a $3 billion deal. with the International Monetary Fund.
The pound has already lost about half its value over the past year, and further declines are widely expected as the Sisi government struggles to secure hard currency from foreign investors in the Gulf and beyond, and the main question is when that will happen, Citigroup and BNP Paribas said. Recently, “another devaluation may be further from what was previously thought.”
One factor in the decline in dollar demand was the country’s car dealers’ association calling on its members to stop buying from the parallel market.
Meanwhile, in the non-deliverable futures market, the pound one-month contract rose 2.4% to around 31.8 on Thursday, the strongest level since March 2.
The pound’s stability since March has prompted some investors to question Egypt’s commitment to a flexible currency system, and a senior International Monetary Fund official said this month that “the government is serious about implementing a flexible interest rate.”
The Washington-based bank is waiting to see Sisi’s government enact more of the wide-ranging reforms it has pledged, including real currency flexibility and privatization deals of state assets, before conducting the first review of the country’s programme.
https://www.bloomberg.com/news/articles/2023-05-18/egyptian-pound-rises-on-black-market-amid-muted-dollar-demand?leadSource=uverify%20wall
Source: بوابة الحرية والعدالة by fj-p.com.
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