The dollar appreciated against the Egyptian pound on increased demand

Dubai, United Arab Emirates (CNN) – The Egyptian pound fell again against the dollar, hitting மத்திய 18.53 for buying and 18.64 for selling at the central bank by the end of Wednesday. March 21.

Analysts attributed the decline to rising demand for the dollar to import from abroad and investment after raising interest rates.

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

As a result of this decision, the dollar hit a record high of .5 18.51 on April 21 and .6 18.62 on sales. After that, before it started its rise again earlier this week, it began to gradually decline, reaching 3%.

Rashad Abdo, a professor of political economy and international relations, said the exchange rate of the pound against the dollar had fallen again after the central bank failed to issue high-income savings certificates that would attract cash flow from the market. On May 19 it raised interest rates again by 2%, which prompted some citizens to reinvest in the dollar, so the black market resumed its activity, prompting the central bank to raise the dollar again.

At the same time, according to officials from two banks, Al-Ahly Bank and Egypt, it issued an 18% higher savings certificate, the amount of which was bought for more than 600 600 billion.

Regarding the fair value of the pound against the dollar, Abido said in an exclusive statement to CNN in Arabic that it was difficult to determine the fair value of any currency in light of the continuing fluctuations in oil prices. And the global inflation rate, and the Russo-Ukrainian war, witnessed the transfer of sanctions not only between the military but also between the West and Russia, and these changes affected global economic performance.

Rashad Abdo pointed out that the effects of the global inflation wave had led to an increase in interest rates worldwide, which prompted the Egyptian central bank to take a decision to avoid “dollarization,” such as investing in dollars and withdrawing cash. The market that saves on high-yielding bank certificates, while attracting foreign investors to invest in government debt instruments, yields 13-14% more than other countries.

For his part, financial market expert Hanan Ramses said that the higher the demand for the dollar, the higher its value against the pound and, conversely, there are factors that determine the exchange rate of the pound against the dollar, including foreign exchange reserves. , Suez Canal revenues, Gulf deposits and the most important of these are inflation.

According to the World Gold Council, Egypt increased its cash reserves by purchasing 44 tonnes of gold from the central bank last February.

In his statements to CNN in Arabic, Ramses believes that the fair value of the dollar against the pound is between 17.5-18 pounds, which, in terms of supply and demand, suggests issuing bonds and treasury bills in currencies other than the dollar. Trade with some countries instead of the dollar to reduce its value against the pound or rely on other currencies in exchange, just as Russia would like to accept the ruble in its trade transactions.

Egypt issued “samurai” bonds for the first time in the Japanese market, worth about 60 billion Japanese yen, equivalent to about half a billion dollars, and wants to issue Egyptian bonds in the yuan in the Chinese market, the second largest. According to an official statement from the Ministry of Finance, the global bond market contributes to a variety of sources and financing tools, attracts new investors, helps reduce costs and diversifies financial resources for development investments.

Hanan Ramses said it would be difficult to predict exchange rate movements in the coming period in light of the persistent economic and political variables the world sees, affecting price movements or the intervention of the central bank to further reduce exchange. The rate of the pound may adversely affect some economic sectors.