Books: Diaa El Sakka
The US dollar continued its decline against the Egyptian pound, at the end of trading on Sunday, hitting its lowest level since the floating decision in November 2016.
And recorded the American currency, on Sunday, at the Central Bank, the lowest purchase price of 15.68 pounds, and the lowest price for sale in the Commercial International CIB by 15.79 pounds.
The following are the prices of the American currency in government and private banks, according to the latest updates of the Dollar Live website:
Egyptian Central Bank
15,685g purchase
15,814g sale
National Bank of Kuwait (Piraeus)
15.74 gm for purchase
15.84g sale
Abu Dhabi Islamic Bank
15.74 gm for purchase
15.84g sale
Egyptian Gulf Bank
15.71g Purchase
15.81g sale
National Bank of Greece, Egypt
15.71g Purchase
15.81g sale
Bank of the Arab International Banking Company SAIB
15.71g Purchase
15.81g sale
National Bank of Egypt
15.71g Purchase
15.81g sale
Egypt Bank
15.71g Purchase
15.81g sale
Bank Audi
15.7 gm Purchase
15.8 gm for sale
Misr Iran Development Bank
15.7 gm Purchase
15.8 gm for sale
United Bank
15.7 gm Purchase
15.8 gm for sale
Credit Agricole
15.7 gm Purchase
15.8 gm for sale
Arab African International Bank
15.7 gm Purchase
15.8 gm for sale
Commercial International Bank CIB
15.69 g purchase
15.79g sale
Expectations of the arrival of the dollar at 14 pounds
For his part, the banking expert, Mohamed Abdel-Aal expected that the dollar will continue to decline, and that it will record between 14 and 15 pounds this year.
Abdel-Alal revealed in statements to Al-Dustour newspaper, the reason for the decline in the green currency, saying: “Last year 2019 witnessed an improvement in many economic indicators, where the growth rate rose to 5.6%, and the budget deficit decreased to 8.2% of the GDP, The domestic debt level decreased to 90%, and the foreign reserve balance rose to exceed the $ 45 billion barrier due to the increase in cash flows, which are all reasons that lead to a decline in the price of the dollar. “
In a related context, the banker, Ahmed Shawky, said that the dollar has witnessed its biggest decline in recent times since the exchange rate liberalization in 2016, in light of expectations that it will break the 15-pound barrier by the end of 2020.
The expert pointed out that the cash inflows from the dollar “petroleum exports, natural gas and others” amounted to 28.49 billion US dollars for the fiscal year 2018-2019, compared to 82.8 billion US dollars, an increase of 2.67 billion dollars, or 10%, and the outcome Exports of the dollar amounted to 21.72 billion dollars during the fiscal year 2016-2017, and this is one of the most important reasons for the decline of the American currency.
Reasons for the dollar’s decline
The dollar’s decline comes due to the increase in banks ’foreign exchange resources, especially from foreign exchange fund investments in the Egyptian financial markets.
An official source at the Central Bank revealed the reason for the sudden decline in the price of the dollar against the pound, saying in statements to “Masrawy” that the decline in the price of the dollar was the result of an increase in dollar flows from international funds to Egypt, which today amounted to more than 490 million dollars.
According to the source, “As a result of the positive developments in the trade agreement between America and China, international funds have started to flow heavily into global markets, and the share of the Egyptian market today is more than 490 million dollars.”
Last Friday, the United States and China announced agreement on some American customs duties on Chinese goods in exchange for the increase of China’s purchases of American agricultural and industrial products and products from the energy sector by about 200 billion dollars over the next two years.
In the agreement, China also pledged to improve US intellectual property rights protection, reduce forced technology transfer, open its financial services market to US companies, and avoid manipulation of its currency.
Banking sources responsible for international funds have also invested about $ 490 million in the Egyptian market.
The sources said in exclusive statements to “Al-Watan” that these figures came as a result of the positive developments in the agreement between China and the United States, where the flows of international funds’ funds began to abundantly enter the global markets, and the share of the Egyptian market today was more than $ 490 million, in debt instruments and a market the money.
Improved monetary conditions
The sources added that these figures express the improvement of monetary and financial conditions in the Egyptian market after the great success of the economic reform program, and the liberalization of the exchange rate was one of its most prominent axes, within the framework of a strong vision of political leadership and understanding and popular support.
This comes in the context of the improvement of foreign exchange resources after the economic reform and the liberalization of the exchange rate through which foreign currency has been traded according to the mechanisms of supply and demand within the domestic market.
Ahmed Al-Shazly, an economic researcher, said that economic reform paved the way to attract various foreign investments, including indirect investments in government debt instruments and the stock market.
He pointed out that the great success of the Central Bank of Egypt in achieving balance and monetary stability within the local market and eliminating the black market after the liberalization of the exchange rate contributed to the local market’s preparedness to attract foreign investments, pointing out that the current exchange rate movement translates the improvement of foreign exchange resources After the flotation.
The dollar had retreated after a significant decline in the American currency, the recent period, reaching more than two pounds, following Tariq Amir’s statements, the governor of the Central Bank of Egypt, that the pound’s exchange rate may witness a greater movement in the coming period, after the end of the mechanism of guaranteeing transfer of funds Foreigners.
Amer told “Bloomberg” that the central bank is committed to ensuring the existence of a “free exchange” market subject to the forces of supply and demand, referring to the stability of exchange rates during the last period to an improvement in the current account, due to the increase in transfers, tourism and exports, and the improvement in the credit rating of Egypt.
A report by the Middle East News Agency revealed that the dollar exchange rate recently recorded the biggest daily fall in two years against the Egyptian pound.
Mina Rafeeq, director of research at Al Marwa Securities, revealed in press statements that maintaining the continued decline in the dollar exchange rate requires working to attract more investments, as well as raising Egypt’s revenues from tourism.
He explained that this decline in the exchange rate of the dollar against the Egyptian pound is due to treasury bonds and debt instruments, and there is currently no justification for the decline in investments, and as long as the investment rates are going at slow rates and there is no movement in the tourism file, the Egyptian pound will not hold up much against the dollar.
While economic analysts and bankers said to the “ASA” that the measures taken by the central bank over the past period to facilitate the entry and exit of foreigners to the Egyptian market began to pay off, noting that the markets began to see the positive effects of the decision to cancel the mechanism of the foreign remittance fund in early December. Through cash flows from international funds, which recorded a positive net income of more than one billion dollars in January alone, for the first time since mid 2018.
In a related context, experts attributed to “Al-Ahram” the reason for the decline of the dollar during the past days in the Egyptian market, to the return of inflows of foreign funds for the first time since May last year.
Experts also confirmed to “Masrawy” website that the reason for the decline is due to the high demand from foreigners to invest in government debt instruments, as Egypt sold more than one billion dollars in debt instruments to foreigners during January, and its proceeds entered into Egyptian banks.
They added that ending the mechanism of transferring foreign investors ’money starting from last month and entering and exiting these funds through the interbank exchange market allowed an increase in foreign flows, which contributed to the abundance of the dollar, and this coincided with the return of the influx of foreign investment to Egypt strongly from January this year.
In a related development, Yahya Aboul Fotouh, Vice President of the National Bank of Egypt, told “Sadat Al-Balad” that the reasons for the decline are due to the investors in emerging markets in Turkey and Argentina withdrawing their investments from the financial markets in those countries in the second half of last year to increase Profits or to reduce losses rates, and with the beginning of the new Gregorian year, investors looked for promising and stable markets and these indicators applied to the Egyptian market.
He explained that the reform measures taken by Egypt during the previous periods reaped the benefits during the new Gregorian calendar year, which contributed to attracting nearly a billion dollars in the form of deposits and investments in the Egyptian capital markets.
Expectations of lower commodity prices
For his part, Deputy Mohamed Badrawi, a member of the Economic Committee in Parliament, said that the price of the dollar decreased for a number of reasons related to the fact that the cash reserve was sufficient for more than 7 months, in addition to increasing dollar revenues from tourism revenues, the Suez Canal and Egyptians’ remittances abroad, and increasing the volume of foreign investments in Egypt .
Badrawi added, in statements to “Echo Al Balad”, that the continued decline in the price of the dollar will lead to a decline in the prices of petroleum derivatives, gasoline and diesel, and a decline in the prices of strategic commodities of wheat, sugar, oil, beans, and corn, in addition to the feed that will lead to a decrease in the prices of red and white meat.
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