The State of Confusion in Egypt’s Black Market for Currency: Dollar Suffers Losses as Price of Pound Rises 12%

A state of confusion dominates the black market for currency in Egypt, with the dollar suffering losses during recent dealings, amid a significant increase in the volume of supply with a collective reluctance by importers to request hard currency from outside banks.

The price of the pound rose 12% on the black market during the past week in light of the shrinking demand for the dollar. The Egyptian currency was trading at about 36 pounds to the dollar yesterday, Thursday, compared to 42 pounds last Friday.

The decline in the price of the dollar

The weak demand for the dollar prompted traders to reduce activity, and the pound is trading through the official channels of banks at the level of 30.9 against the dollar, and the reason behind The decline in the price of the dollar On the black market, to the government’s moves during the last period, which were:

• Announcing the implementation of two deals within the government offering program, which indicates the government’s intention to proceed with the implementation of the program during the current year.
• The decision of the Council of Ministers to exempt gold imported from abroad accompanied by expatriates from fees and customs, with the exception of value-added tax, which is calculated on workmanship only. The decision caused a significant decline in gold prices in the Egyptian market during the past few days.
• The government continued to release goods, especially fodder, that were stacked in the ports, which was one of the most important reasons for importers resorting to the black market, and thus increased speculation on the dollar and its price rising to 42 pounds in last week’s transactions.
• One of the factors that led to the decline in demand for the dollar was the call of the Association of Car Dealers in the country for its members to stop buying from the parallel market.

The activity of speculators has declined in recent dealings, with the absence of demand for the dollar, which was traded in the parallel market at levels of 35 to 36 pounds. This violent decline in exchange rates caused the majority of traders and speculators to incur heavy losses.

Bridging the dollar gap

For his part, Prime Minister Dr. Mostafa Madbouly sent a message of reassurance to the people that the state is capable of bridging the dollar gap, and during a conference to clarify the decisions of the Supreme Investment Council, he revealed that the cabinet discussed sustainable follow-up mechanisms for all of those decisions, to ensure moving forward in their implementation.

With regard to the investor’s profits, Madbouly explained that the state during the first months of the crisis did not witness any problem related to the transfer of the investor’s profits, and the evidence for this is that in the midst of the crisis, the state allowed the exit of $ 21 billion of what is called “hot money”, which proves that the state did not put No restrictions on the entry and exit of investor funds.

Madbouly stressed that the state is fully committed to facilitating the exit of investors’ profits, adding: “I would like to reassure the Egyptians that Egypt is capable of bridging the dollar gap … and today there is a very clear plan for that.”

He pointed out that the volume of investments that will be injected by local and foreign investors will contribute to a reduction Inflation ratewhich is reflected positively on the level of commodity prices.

He added, “Whenever there is an increase in the volume of investments, this is followed by an increase in the amount of hard currency available, which reflects positively on the value of the Egyptian pound and contributes to its real value evaluation.”

He explained that these decisions also contribute to providing more job opportunities for young people, saying: “The state is required to provide one million new job opportunities annually,” pointing in this regard to the state’s efforts to pump more public investments to provide more job opportunities.

Commodity prices decline

For his part, economist Dr. Khaled Al-Shafei said that the reason for the decline in the price of the dollar on the black market by 12% is due to government decisions and measures taken by the state to prevent the crisis from worsening and the parallel market prices for the dollar during this important and sensitive stage.

Al-Shafei added, in statements to “Sada Al-Balad”, that these recent government measures and decisions were able to eliminate the black market and work to lower the price of the dollar in this market, including decisions related to gold and decisions related to reducing imports and not relying on the black market to meet the needs of importers. As well as putting pressure on the dollar so that its price does not worsen and rise against the Egyptian pound.

Al-Shafei continued that all these measures were crucial decisions in addition to the decisions taken by the Supreme Investment Council, which increases investment opportunities for the state and activities, and the localization of many industries, in addition to offering companies offered on the stock exchange.

He concluded that all of these main reasons are working to avoid it The rise in dollar prices On the black market, as well as among the reasons for the abolition of customs duties on gold, which are important and vital decisions that were able to work to reduce the price of the dollar on the black market, which are immediate decisions that are in the interest of the Egyptian economy, adding: We will witness more improvement in many basic commodities in the market due to the decline in prices dollar in the Egyptian market.