Free fall for the black market dollar.. The Central Bank directs new strikes and prices fall to 40 pounds

The price of the dollar on the black market recorded significant fluctuations during today’s trading, Saturday 9-12-2023, amid expectations that the Central Bank of Egypt will take new measures to completely eliminate the black market and inflict huge losses on speculators.

Among the positive news is that the International Monetary Fund has initiated two reviews of Egypt’s economic program, followed by the disbursement of two tranches of the three billion dollar loan. The International Monetary Fund will also discuss the possibility of doubling the loan, and that news was like a storm on the black market and the decline of the dollar in it.

The price of the dollar on the black market continued to decline with the improvement of dollar liquidity in Egyptian banks and the provision of hard currency easily and without complications.

Meanwhile, the dollar declined on the black market, recording around 40 and 41 pounds, down from the level of fifty pounds at some times, and this is considered a drain on the green card.

In a related context, HC Securities & Investment revealed its expectations for the future of the Egyptian economy during the coming period in 2024, as the expectations included addressing some macroeconomic indicators, including the future of the Egyptian currency exchange rate and the inflation rate.
Heba Mounir, a macroeconomic analyst at HC, noted that a lack of dollar liquidity and tight monetary trends are constraining GDP growth. The real increase in Egypt’s GDP slowed to 3.8% during the fiscal year 2022/2023.

Mounir expects economic growth rates to increase to 4% in the current fiscal year 2023/2024, which is close to the government’s target of 4.1%. In contrast, the International Monetary Fund’s forecast for Egyptian economic growth is estimated at 3.7%, as published in October 2023.

The macroeconomic analyst at HC explained that the decline in tourism revenues by 15% on an annual basis due to the Israeli war on Gaza may affect the growth of GDP to reach 3.3%. The overall surplus payments are also expected to decline by approximately 50%.

Where is the pound going?

According to HC, their forecast is for a devaluation of the pound by 37% per year in the 2022/2023 financial year, and a decline of about 19% in the 2023/2024 financial year, according to the official exchange rate index, compared to a 6% depreciation in the pound per year. Finance 2021/2022.

For her part, the macroeconomic analyst at HC attributed the decline in the value of the pound to the exit of foreign capital from Egypt after the Russian-Ukrainian conflict, which increased inflation pressures and negatively affected corporate borrowing and personal consumption.

Mounir expects GDP growth for FY2022/2023 to be stimulated by an increase in personal consumption of +5.9% per year, and growth in foreign direct investment of +28.4% per year, with a contraction in the trade deficit.
According to Mounir, it is expected that inflationary pressures will continue in the 2023/2024 fiscal year as a result of the decline in the value of the pound. She explained that the inflation rate is likely to accelerate to reach an average of 33.2% annually, compared to 24.1% in the 2022/2023 fiscal year and 8.48% in the 2021/2022 fiscal year.

It is also expected that the Monetary Policy Committee will maintain interest rates at its next meeting on December 21, after raising them by 1,100 basis points since the 2021/2022 fiscal year to address inflation pressures, given that these pressures come from the supply side.

Transfer of Gulf deposits

Regarding Egypt’s external debt, it reached $165 billion by the end of June 2023, according to HC estimates. During the fiscal year 2022/2023, the government paid about $33.9 billion and transferred about $24.0 billion, most of which were deposits to Gulf Cooperation Council countries, representing about 41% of its total dues for that year in addition to an amount due amounting to $24.7 billion for the fiscal year 2023/ 2024.

On the other hand, the banking sector’s foreign currency liabilities, including the Central Bank, increased by 36% to $27.1 billion in June 2023, and are expected to decrease by an estimated 6% in June 2024 to $25.5 billion, as a result of improved currency flows. Foreign. The improvement in the inflow of foreign currencies, including proceeds from the government offering program and foreign direct investment in the services sector, is expected to have a positive impact on this decline, especially in the real estate, finance, and information technology sectors.
The macroeconomic analyst at HC stressed that Egypt’s implementation of the International Monetary Fund reform program, and achieving equal opportunities with the private sector, are necessary to attract foreign direct investments and increase foreign currency liquidity in Egypt.

The budget deficit is expected to widen to 7.1% of GDP in the 2023/24 fiscal year, a rise mainly attributable to increased interest costs. This figure reflects an increase from the deficit rate, which reached 6.1% of GDP in the fiscal year 2022/2023, and remains similar to what was recorded in the previous year, which is in the year 2021/2022, according to HC.

The price of the dollar fell on the black market

The dollar and foreign currencies usually decline on the black market whenever there is reassuring news about the state of the Egyptian economy, or positive expectations are issued by international institutions and banks about the future of the pound, as supply increases and demand decreases in this case. And vice versa, the price of the dollar and foreign currencies rises and demand increases whenever the news is negative and reassuring about the economy and the future of the pound.

The Ministry of Interior strikes the currency mafia… the fall of new high-caliber merchants

The Public Security Sector, in coordination with the Giza and Red Sea Security Directorates, was able to control two cases of illegal trading in foreign exchange outside the scope of the banking market.
Details refer to the arrest of a worker in the Hurghada First Police Department in the Red Sea Governorate, in possession of sums of money in foreign and local currencies.

Two people were arrested at Al-Ahram Police Department in Giza Governorate, and they were in possession of sums of money in foreign and local currencies.

When confronted, the defendants admitted that they possessed the sums of money with the intention of trading them outside the scope of the banking market, in order to achieve illegal profits.
Legal measures were taken to present it to the Public Prosecution to initiate investigations.

This came within the framework of the efforts of the Ministry of Interior’s agencies to combat crime in all its forms, especially crimes of illegal trading in foreign exchange outside the scope of the banking market.