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Friday, 13 December 2019

Egyptian pound strongest in more than two and a half years

The rise came as a result of the foreign exchange inflows such as investments in Egyptian treasuries, steadily improving tourism, strong remittances from Egyptian expats, and a narrowing trade deficit

Reuters , Thursday 24 Oct 2019
Egyptian pound
Egyptian pound to US dollars (Photo: AP)
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The Egyptian pound strengthened further against the U.S. dollar on Thursday, trading at 16.10 against the greenback, its strongest in more than two and a half years.

The dollar value has dropped by more than EGP 1.5 since the start of the year.

The pound has seen a steep climb in 2019, rising 9.85% against the dollar since Jan. 1. Analysts have said it was mainly boosted by higher foreign exchange inflows.

Those FX inflows mainly came from investments in Egyptian treasuries, steadily improving tourism, strong remittances from workers abroad and a narrowing trade deficit, said Allen Sandeep, head of research at Naeem Brokerage.

The pound rose 2.4% this month alone. It was last this strong on March 4, 2017.

Sandeep said he expected the pound to continue appreciating against the dollar through the first quarter of 2020.

Mohamed Abu Basha, an economist at Egyptian investment bank EFG Hermes, said a strong pound would help maintain low inflation, which hit its lowest in almost seven years last month, and could potentially stimulate greater consumption.

“It’s not helping exports though, but the latter is a relatively much smaller part of the economy,” he said. The pound was devalued in November 2016, when it traded at 8.88 to the dollar, as part of an economic reform programme tied to a three-year, $12 billion loan from the IMF.

It reached its weakest shortly after the devaluation, trading at 19.62 in December 2016.

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