Urgent: The Egyptian pound suddenly drops after two weeks of cohesion

Urgent: The Egyptian pound suddenly drops after two weeks of cohesion

The exchange rates of the US dollar rose suddenly during trading today, Tuesday, after more than two weeks of stability in the exchange rates of the US currency in the Egyptian market.

According to the data of the largest national Egyptian banks, the National Bank of Egypt and Banque Misr, the exchange rate rose to 18.73 pounds for purchase, while it increased to levels of 18.79 pounds for sale, meaning that the increase came in the value of two piasters.

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During these moments, the Egyptian pound is trading near the lowest level ever against the US dollar, which was recorded at the beginning of the year 2017, following the decision to liberalize exchange rates when it exceeded the levels of 19 pounds.

In private banks, the dollar exchange rate rose by 4 piasters to reach levels of 18.81 pounds for sale and levels of 18.76 pounds for purchase, and for you in the Egyptian Gulf banks, Abu Dhabi Islamic and the International Commercial Bank.

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price evolution

In March 2022, specifically on the 21st, the Egyptian pound fell within 17%, from levels of 15.65 pounds to the dollar to levels of 18.3 pounds to the dollar, and the pound continued to decline until it reached levels near 18.7 pounds to the dollar.

With a new liberalization of exchange rates, the customs dollar base was restored, which amounted to 16 pounds, and in the following month 17 pounds, and then the last increase was approved, which amounted to 18.6 pounds to the dollar.

In November 2016, the Central Bank of Egypt announced the liberalization of the exchange market, floating the Egyptian pound against the dollar, and setting an indicative rate at 13 pounds to the dollar, an increase estimated by more than 46% at once.

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Before the Central Bank of Egypt’s decision in October of the same year, the black market was the main driver of dollar prices in the exchange market, as the dollar exchange rate on the black market recorded about 18 pounds, compared to about 8.88 pounds in the official market.

After that, banks operating in Egypt began to set the dollar’s price freely until the dollar’s exchange rate jumped at the end of the year to nearly 20 pounds, recording an increase of 53% since the launch of the indicative price on the first day of the flotation process.

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higher than its real value

HC said the Egyptian pound is overvalued, as evidenced by the JPMorgan (NYSE:JPM) real effective exchange rate index at 108 basis points, and the change in the outlook for the Egyptian economy to negative from stable by Moody’s.

As well as the intensive selling in emerging markets, and the low return on treasury bills with one-year terms, hinder the flows benefiting from the price differences and reduce the interest rate hike, from our point of view.

The investment bank added that we note that the yield on one-year treasury bills increased by 90 basis points only after the interest rate increases by 300 basis points, while the yield on 3-month treasury bills increased by 370 basis points.

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