Books – Radi Abdel Bari:
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Sunday 19 January 2020 – 2:44 AM
| Last updated :
Sunday 19 January 2020 – 2:44 AM
Experts and analysts expected the continuation of the decline of the US dollar against the Egyptian pound during 2020, to reach the dollar to 14 pounds by the end of the year, by supporting the continued positive performance of the tourism sector, increasing the revenues of the Suez Canal, and the increase in the Egyptian export proceeds, with expectations of continuing to decline during the first quarter of 2020.
The exchange rate of the US dollar witnessed a decrease of 10.2% during the year 2019 against the pound, at a value of about 1.80 pounds, to reach 16.05 pounds in the first of last December, compared to 17.78 pounds in early January.
It continued to decline during the beginning of this year, losing the dollar 25 piasters since the beginning of January and reaching 15.81 pounds.
This decline comes amid expectations of a continued decline in the price of the American currency in the local exchange market, supported by the stability of supply and demand mechanisms and the activity of the interbank mechanism – the purchase and sale of dollars between banks – as well as the continued demand of foreign investors to buy government debt instruments and treasury bonds.
Experts stressed that the remarkable rise of the pound during the year ended due to increased confidence in the Egyptian economy as a result of the progress of Egypt’s financial indicators due to the positive impact of the reform program, which led to flows in the foreign currency.
Sharif El-Sherbiny, former director of investment in one of the banks, expected that the pound will continue to rise to reach 14 pounds by the end of the current year, indicating an increase in the dollar supply and a decrease in demand for it. Significantly over the past period, supporting the strength of the pound, in addition to increasing foreign exchange flows, especially portfolio funds, which are estimated between 200 to 300 million dollars per day, and rising to 500 million dollars in some days and the increase in total Egyptian transfers Abroad, hoping to record some $ 26 billion during the year.
Al-Sherbiny added that whoever wants to know what is happening now to the dollar, he must remember the central bank statement on the morning of the decision to liberalize the exchange rate on the third of November 2016, in which he set the value of the dollar at 13 pounds and months later, the Monetary Fund announced that this price is its evaluation of the dollar in Egypt, this It means that the value of the dollar at the time of liberalization of the exchange rate is 13 pounds despite the bad economic conditions at the time.
He pointed out that the decline in the price of the pound in the wake of the floating decision and its registration between 19-18 pounds due to the control of fear on the dealers made it retain the dollar and speculate on it and even the institutions were buying large amounts of currency.
He added that the situation is now completely different and the economy is much better and we have been standing on solid ground and have been able to achieve high growth compared to many countries, coinciding with the increase in dollar revenues, for example, the balance of foreign investments in treasury bills exceeded 20 billion dollars, in addition to the increasing transfers of Egyptians abroad through channels Legitimacy and tourism revenues increased to more than 15 billion dollars.
El-Sherbiny pointed out that the foreign exchange reserves exceeded 45 billion dollars for the first time in its history after the real reserves were negative in one period.
Al-Sherbiny attributed this improvement in the value of the pound to the central bank and its custodians, especially as it led the dollar battle and monetary policy after professionally liberalizing the exchange rate.
Economist Mohsen Adel said that the better the economy, the better the pricing of the currency in the free market will be in favor of the local currency.
Adel added that the improvement in the economic climate, the decline in the rate of inflation, the high rate of growth, the increase in the size of the cash reserves, the increase of Egyptians’ remittances abroad and the economic reform measures contributed greatly to the pound’s recovery against the dollar.
He pointed out that the moderate recovery in the net cash balance and tourism sector flows will increase the strength of the Egyptian pound against the dollar.
He expected the strength of the pound against the dollar to increase in 2020 if the improvement in economic performance continues with monetary policies that maintain the strength of the pound without any interference by any party, indicating that price elasticity has many factors and part of it is related to the ratio of foreign inputs to the total cost of the product and the volume of supply From the local products against the local products and the costs of the import process, the low price of the dollar stimulates the decline of prices during the coming period ».
He pointed to the role of foreign exchange flows, especially the portfolios’ funds, which are estimated between 200 and 300 million dollars per day, and rise to 500 million dollars on some days, noting that the flows of foreign investment funds in the local money market, especially in treasury bills and bonds, contributed to Support liquidity in foreign currency. Reports attributed the increase in the total remittances of Egyptians working abroad to record about 26 billion dollars within a year, which reflects the confidence of Egyptians in dealing with the Egyptian banking system as a positive result of the decision to liberalize the exchange rate of the pound.
The central bank attributed the recent decline in the dollar to the noticeable increase in banks’ foreign exchange resources, especially from foreign exchange fund investments in financial markets.
The investment bank «Hermes» believes that the increase in tourism revenues, in exchange for the decrease in the current account deficit, are two factors that will contribute to increasing the advantage of the pound.
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