Business & Economy

Record highs in the dollar to where?

Before the crisis began, specifically in March of last year, the dollar was trading in the Egyptian market at the level of 15.77 pounds.

However, over the past 10 months, the dollar exchange rate was moved to record the level of 32.20 pounds at the present time, so that the dollar exchange rate increased by more than 104% in 10 months.

Analysts link the return of talk about the fair price, and the statements received from the International Monetary Fund regarding the need to adopt a flexible exchange rate with full floating of the Egyptian pound against the dollar, in addition to the continuing crisis of scarcity of goods stacked in Egyptian ports.

Economic expert Hani Genena said that the market is still witnessing a state of fluctuation and instability so far, despite the presence of dollar inflows during the coming period, the first of which is related to the first tranche of the International Monetary Fund, and it is likely that the total financing will reach $ 2 billion.

He also explained that what is happening in terms of the rise in the price of the dollar at the present time is not a fifth flotation, but a continuation of the fourth flotation that occurred during the last week of last October.

He also added that what is happening in the dollar exchange rate at the present time is nothing but a real flexible exchange rate that is subject to supply and demand mechanisms, and what happened in the past was nothing but an adjustment to the exchange rate to approach the fair value of the US dollar exchange rate.

As for Goldman Sachs, in a recent research note, the adjustment is not yet complete, and it must continue significantly before supply and demand balance is restored in the foreign exchange market.

The bank’s economist, Farouk Sousse, said that Egypt has made “progress in recent weeks,” but the lack of significant inflows from the Gulf countries and the limited ability of the Central Bank of Egypt to provide liquidity in foreign currency in the market implies further depreciation of the pound and/or increases in local prices. In the coming days

And while the pound has reached high levels at the present time, “the parallel rate, according to the average daily price, is closer to 35 pounds to the dollar (the exchange rate in force in the gold market is about 33 pounds to the dollar.”

Whereas, HSBC Bank expected the Egyptian pound to find a floor at a level between 30 and 35 against the dollar in the short term, indicating that interest rates may rise with inflation expected to rise beyond that at 25% in the first quarter of 2018. 2023.

He explained that “even a decline to more than 30 against the dollar, which raises the losses of the pound’s price to 50% (raising the dollar’s ​​gains to more than 100%), may not put pressure on the high enough import bill or lead to a sufficiently strong recovery in flows.” Remittances are immediate, but current account pressures are easing.”

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