archyworldys

The dollar recorded the highest level against the Egyptian pound due to the increase in demand

Dubai, United Arab Emirates (CNN) – The Egyptian pound fell again against the dollar, to record 18.53 pounds for purchase and 18.64 pounds for sale at the Central Bank by the end of Wednesday, to record its highest level since the exchange rate cut on March 21.

Analysts attributed the reasons for this decline to the rise in demand again for the dollar to import from abroad, and to invest after raising the interest rate.

The exchange rate of the pound fell against the dollar at the end of last March, after an exceptional meeting of the Monetary Policy Committee of the Central Bank of Egypt to raise the interest rate by 1%.

As a result of the decision, the dollar recorded its highest level on April 21, at 18.51 pounds for buying and 18.62 pounds for selling. After that, it started declining gradually, reaching 3%, before resuming its rise again at the beginning of this week.

Professor of Political Economy and International Relations, Rashad Abdo, said that the decline in the exchange rate of the pound against the dollar again was caused by the failure to issue high-return savings certificates that would attract liquidity from the market, after the Central Bank raised the interest rate again by 2% on May 19, which prompted Some citizens re-invested in the dollar, so the black market resumed its activity, which prompted the Central Bank to increase the price of the dollar again.

At the same time, Al-Ahly Bank and Egypt issued a high-return savings certificate of 18%, the volume of which was purchased by more than 600 billion pounds, according to statements by officials of the two banks.

On the fair value of the pound’s exchange rate against the dollar, Abdo said, in exclusive statements to CNN in Arabic, that it is difficult to determine a fair value for the exchange rate of any currency, in light of the successive changes in oil prices and the global inflation rate, and the Russian-Ukrainian war, which was not only military, Rather, it witnessed the exchange of economic sanctions between the West and Russia, and these changes affected the global economic performance.

Rashad Abdo pointed out that the repercussions of the global inflation wave caused an increase in interest rates globally, which prompted the Central Bank of Egypt to take a similar decision to avoid “dollarization”, that is, investing in the dollar, and withdrawing liquidity from the market to save in high-return bank certificates, and at the same time Attracting foreign investors to invest in government debt instruments, with returns ranging between 13-14% higher than those in other countries.

Read also  Tadawul Group: Implementation of Post-Trading Infrastructure Improvements Completed

For her part, financial markets expert Hanan Ramses said that the greater the demand for the dollar, the higher its price against the pound and vice versa, adding that there are determinants of the exchange rate of the pound against the dollar, including foreign exchange reserves, Suez Canal revenues, Gulf deposits, and the most important of these determinants is inflation.

Egypt boosted its monetary reserves by purchasing 44 tons of gold by the Central Bank of Egypt last February, according to a report by the World Gold Council.

In her statements to CNN in Arabic, Ramses believes that the fair price of the dollar against the pound ranges between 17.5-18 pounds, based on the forces of supply and demand, while it suggested issuing bonds and treasury bills in currencies other than the dollar to lower its price against the pound, or relying on other currencies in the exchange. Trade with some countries instead of the dollar, just as Russia wants to adopt the ruble in its trade dealings.

Egypt offered for the first time “samurai” bonds in the Japanese market, with a value of 60 billion Japanese yen, equivalent to about half a billion dollars, and intends to offer Egyptian bonds in yuan in the Chinese market, which is the second largest bond market in the world, which contributes to diversifying sources and financing tools, and attracting New investors, and helps reduce the cost and diversify sources of financing for development investments, according to an official statement by the Ministry of Finance.

Hanan Ramses said that it is difficult to predict the movements of the exchange rate during the coming period in light of the successive economic and political variables that the world is witnessing, affecting price movements, or the intervention of the Central Bank to further reduce the exchange rate of the pound, which may negatively affect some economic sectors.

Trending