Continuous reductions against the dollar.. the Egyptian pound is a currency that has no place of expression in the time of the military

The Egyptian pound continues to decline against the US dollar and foreign currencies, to the extent that it no longer has a place of expression at the time of the military gang that adopts policies that will lead to the collapse of the Egyptian economy and bankruptcy of the country.

The Egyptian pound had plunged by more than 15% suddenly after the Central Bank’s decision to raise the interest rate on March 21, as the price of the US dollar reached more than 18 pounds, while experts confirm that the Egyptian pound is on its way to a second wave of decline within days, The central bank’s decision to raise the interest rate is expected, thus reducing the pound against foreign currencies and bringing the value of the dollar to 23 or 25 pounds.

3 scenarios

Experts expected 3 scenarios for the pound against the dollar:

– The first scenario, the continued decline of the pound against the dollar amid global pressures and a decline in foreign exchange flows from its sources.

– The second scenario, the pound making a corrective move against the dollar after the coup government signed the planned agreement with the International Monetary Fund, and the return of foreign capital inflows to the domestic debt market.

The third scenario, the continuation of the stage of ups and downs according to market mechanisms, supply and demand, with expectations of interventions from the Central Bank to raise interest rates on the Egyptian pound in the coming period to maintain the currency’s strength in the face of challenges.

new restrictions

In this context, the coup government imposed new restrictions on US dollar transactions without announcing it, as dealers were surprised by these restrictions in recent weeks, which portends a silent crisis in hard currency flows, which may lead at any moment to a new collapse in the exchange rate of the Egyptian pound. .

Banking sources revealed that the Central Bank imposed new restrictions on the exchange of the US dollar as a result of the scarcity of it available in the market, in conjunction with the decline in cash reserves, and the increase in the need for the dollar as a result of the increase in the prices of imported goods from abroad.

She stressed that the current crisis will lead to a new collapse in the exchange rate of the pound, especially as banks gradually began restricting the process of withdrawing the dollar and placing more restrictions than before, noting that Egypt is following the same path as Lebanon.

The sources did not rule out that the banks would soon stop the exchange of the dollar to dealers completely, explaining that the new restrictions imposed on the movement of hard currency include that the banks require those who wish to withdraw US dollars to submit a written request that includes a clarification of the reason for withdrawal, and do not agree to exchange the dollar to any dealer except If he is traveling, and the banks also require him to present the security clearance for travel to ensure the seriousness of his travel and destination, after which an amount not exceeding a thousand dollars is disbursed to him.

She pointed out that importers are facing difficulty in obtaining dollars, as banks require them to indicate the goods they wish to import before agreeing to open bank credits or agree to transfer hard currency abroad, warning that there is a silent crisis that may topple the pound at any moment, and may lead To banks refraining from liquidating foreign currency accounts or converting the pound into US dollars, European euros or any other foreign currency, which means that the entire economy may face a major shock soon.

interest rate

Dr. Walid Jaballah, an economist, said, “It is not possible to predict the dollar’s path against the pound currently due to the uncertainty that is sweeping the world regarding the end of the Russian-Ukrainian war and its attendant repercussions.”

Jaballah added in press statements that the global economy is facing the specter of stagflation, which casts a shadow on foreign direct investment flows, and is affecting the value of the currency, as well as the continued moves of the US Federal Reserve to raise interest rates.

Third discount

Economist Alaa El-Sayed expected a third devaluation of the pound following the issuance of the Central Bank of Egypt’s decision to raise the interest rate, stressing that the value of the pound against the dollar may reach from 22 to 25 pounds.

In a press statement, El-Sayed warned that the military state, in light of the accelerating developments and successive crises, may not be able to control the movement of the pound against the dollar, so it will fall more close to 30 pounds.

He stressed that the International Monetary Fund demands the coup regime to leave the pound according to market mechanisms, i.e. supply and demand, until it agrees to provide a new loan to the Sisi regime, explaining that according to the Fund’s conditions, the value of the dollar will rise to about 25 pounds and perhaps 30 pounds, if the evaluation is left without the central administration and mechanisms market .

Al-Sayed pointed out that the pound is weak, the GDP is weak, and the economy is slowing down; This affects the real value of the pound, warning that the possible steps that the central bank will take will lead to an increase in inflation rates and higher prices, and the bill, as usual, is paid by the people, in light of stagflation or stagflation in the sense of the presence and availability of goods in the market, but the consumer cannot buy them due to high prices and weak ability purchasing.

He explained that although inflation reversed stagnation, the worst economic conditions are stagflation, meaning there is both inflation and stagnation, and this is what is happening now in Egypt, which increases the suffering of the people and puts pressure on their pockets and budget, stressing that all this is due to the economic sins of the coup governments since 2013.

Al-Sayed stressed that the coup regime will do everything in its power to attract hot money back to the body of the economy, but to no avail. It seeks to sell assets and sell more companies, but it will not succeed in attracting new hot money to work in buying bonds and treasury bills.

He expected that these conditions would prompt the coup regime to announce soon its inability to repay foreign loans, and this would mean an official declaration of bankruptcy.

Source: بوابة الحرية والعدالة by

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