“Egyptian Pound Futures Contracts Reach Record High of 44 Pounds per Dollar Amidst Foreign Liquidity Scarcity”

Egyptian Pound

Despite the continued calm and stability in the exchange rates of the dollar in the official market, the Egyptian market is awaiting new movements that may lead to announcing the fourth flotation of the Egyptian pound against the dollar in light of the scarcity of foreign liquidity and the high price of the dollar in the parallel market.

During the blessed Eid Al-Fitr holiday, the black market witnessed intense activity with the return of speculation that caused the dollar exchange rate to rise in the parallel market to the level of 37 pounds.

In the official market, and with the two largest local banks in terms of assets and transactions, namely the National Bank of Egypt and Banque Misr, the exchange rate of the dollar stabilized at 30.75 pounds for purchase and 30.85 pounds for sale. In private banks, the exchange rate of the dollar in the Commercial International Bank – Egypt recorded about 30.85 pounds for purchase and 30.95 pounds for sale. At the Central Bank of Egypt, the exchange rate of the US green note has stabilized at 30.83 pounds for purchase and 30.95 pounds for sale.

In terms of major currencies, the single European currency recorded an increase between 7 and 10 piasters in buying and selling in Egyptian banks. In the National Bank of Egypt and Banque Misr, the exchange rate of the euro recorded a level of 33.66 pounds for purchase, 33.86 pounds for sale. At the Central Bank of Egypt, the exchange rate of the euro stabilized at 33.83 pounds for purchase, 33.97 pounds for sale.

The exchange rate of the pound sterling also recorded slight increases, to reach, in the National Bank of Egypt and Banque Misr, the level of 38.13 pounds for purchase and 38.38 pounds for sale. At the Central Bank of Egypt, the exchange rate of the pound sterling stabilized at 38.33 pounds for purchase and 38.49 pounds for sale.

In the Arab world, the exchange rate of the Saudi riyal recorded a level of 8.19 pounds for purchase and 8.22 pounds for sale. The exchange rate of the UAE dirham has also stabilized at 8.39 pounds for purchase and 8.40 pounds for sale. The Kuwaiti dinar exchange rate recorded a level of 99.72 pounds for purchase and 100.66 pounds for sale.

Recently, Standard & Poor’s ratings agency lowered its outlook for Egypt from stable to negative while keeping the credit rating of sovereign assets at B/B. The agency indicated that negative expectations reflect risks that the policy measures implemented by the Egyptian authorities may not be sufficient to stabilize the exchange rate and attract foreign currency inflows necessary to meet the sovereign’s high foreign financing needs.

And it is likely that the devaluation of the Egyptian pound will reach about 53% by the end of the current fiscal year until June 30, 2023, compared to the exchange rate 12 months ago. The agency estimates that a modest depreciation of the pound will follow in subsequent years, according to the rating agency’s analysts, according to Bloomberg.

At the same time, the Egyptian treasury bonds bids during the last period witnessed a low yield, despite the coverage of the bid, but the acceptance rate became low, reaching at the beginning of this April 0.04% of the total required amounts.

The average coverage rate for 3-year treasury bonds in Egyptian pounds was 2.5 times twice the amounts required during the period from the beginning of 2023 to the beginning of April 2023, which is more than the 2022 average at 1.6 times and the historical average at 2.2 times.

Despite these rates, the acceptance rate is 0.6 times the amount required during the period from the beginning of 2023 to the beginning of April 2023, in line with the acceptance rate during 2022 and less than the historical average of 1.1 times. This reflects the significant increase in the average return of the offered offers as a result of the increase in interest rates.

And the futures contracts for the Egyptian pound for 12 months continued to rise, to record a new record, with breaking the barrier of 44 pounds per dollar for the first time.

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