Egypt Independent

US dollar price in Egypt hits lowest level in two years



 

The US dollar fell on Sunday during mid-day trading in Egyptian banks, hitting its lowest level in two years.

The dollar fell against the pound on Sunday with a decline ranging from one piaster to 21 piasters across all banks operating in the Egyptian market.

The Central Bank of Egypt (CBE) recorded a decrease of 22 piasters to stand at LE 17.63 for purchase and LE 17.76 piasters for sale. It saw a decrease of 14 piasters in the National Bank of Egypt (NBE) and Banque Misr to stand at LE 17.65 for purchase and LE17.75 for sale.

Banking expert Mohsen Khodair attributed the decline to reform measures taken by the government, which contributed to attracting nearly one billion dollars in the form of deposits and investments in the Egyptian capital markets.

He stressed that the recent measures taken by the CBE to facilitate the entry and exit of foreigners to the Egyptian market has begun to bear fruit, evidenced by cash flows from international funds, which recorded a positive net gain of more than $ 1 billion in January for the first time since mid-2018.

He explained that the downward trend of the dollar is normal as the supply of dollars at the banking system is large, which helped lower the exchange rate.

The main reason for the decline in the dollar against the pound is the abundance of foreign currency, due to the high demand of foreigners investing in treasury bills, banking expert Sahar al-Damaty explained, adding that this is evidence of the strength of the Egyptian economy and the absence of risks.

Damaty told Al-Masry Al-Youm that the situation in the emerging markets has significantly contributed to increasing demand for investment in Egypt.

The Egyptian market has become a strong competitor due to advantages from low risk and the country’s stability, she said.

Several factors helped provide foreign exchange: the increase in remittances from Egyptian expatriates, the increase in the Suez Canal revenues, the recent increase of tourism rates, the increase in export returns and the decrease of imports during the past months which has created a balance.

Damaty predicted that the US dollar price will continue to decline in the coming period, leading to a decline in all commodity prices while reducing inflation rates in general, thank to the CBE’s successful policy.

Youssef Farouk, a banking expert, said that the decline in the US dollar price was due to high foreign purchases of treasury bills, and that for the first time five percent of the yield on treasury bills was cut due to high demand. 

Farouk expected the dollar to continue to fall between one and two percent in the coming period, given the improvement in the Egyptian pound indices.

Central Bank Governor Tarek Amer said during an interview with Bloomberg last week that the exchange rate of the Egyptian pound could soon see improvement due to an establishment of the “mechanism of guarantees” on the transfer of foreign funds.

He stressed that the CBE is committed to ensuring a free exchange market subjected to supply and demand. He attributed the stability in exchange rates recently to increased remittances, tourism and export rates, and an improvement in Egypt’s credit rating.

Edited translation from Al-Masry Al-Youm