A recent report revealed that There are a number of reasons behind the decline in the exchange rate of the dollar in the Egyptian marketThe first is the increase in supply thanks to the high-yield certificates announced by Egyptian government banks, with an annual return of about 25%, in addition to the increase in tourism revenues.
Among the reasons is also the growth in the proceeds of remittances, in addition to the decline in demand for foreign currency due to the depreciation of the Egyptian pound against the dollar, the increase in interest rates, and the continued uncertainty about the economic performance in the short term.
According to a recent research note by Goldman Sachs, the reasons also include increasing confidence in the Egyptian currency with the completion of the financing program with the International Monetary Fund, as well as working to release goods in Egyptian ports, and slowing the pace of government investment in some national projects.
On the other hand, the American Investment Bank indicated that there are still restrictions on the use of foreign exchange in a way that indicates that there is an unmet demand and therefore there is a parallel market at prices higher than the exchange rates in the official market.
The report indicated that Egypt has made great progress in reforming the exchange rate, but the market has not yet reached the equilibrium stage.
A delegation from the American Investment Bank visited Egypt on January 16 and 17, and met with a number of government officials and private companies.
In general, cautious optimism and satisfaction prevailed with the progress made in unifying the exchange rate.
The bank said in the research paper that the central bank’s commitment to the flexibility of the exchange rate at the present time seems real, as it no longer interferes directly or indirectly in the foreign exchange market, especially since the exchange rate occupies a large part of the interest of the International Monetary Fund, which monitors the market closely. Close and set measures and indicators in his program with Egypt, which extends for about 46 months, to ensure continued commitment, and the turmoil in the exchange market last week also supports this result.
The report indicated that the lack of intervention by the Central Bank of Egypt does not necessarily mean that the exchange market operates freely, and that restrictions on the use of foreign currency mean that the official market is still under pressure.
At the same time, Russia is moving towards activating a mechanism to accept payments for grain export deals to Egypt, in its local currency (the ruble), according to what was announced by the Russian Deputy Prime Minister, Victoria Abramichenko.
And while she confirmed that Moscow has not yet fully converted to trading its goods using national currencies, Abramchenko stated that there is a strong tendency in her country to activate this step.
And she revealed, according to the Russian agency “Sputnik”, that the most prominent example of this is the grain deal concluded by Moscow with Turkey, in which the latter made payments in rubles, and the deal was already successful. She indicated that Egypt comes at the top of the list of countries that import the most Russian grain. The volume of trade exchange between Egypt and Russia is about $4.7 billion in 2021.
