USD drops against EGP in parallel market: Reports

Ahram Online , Sunday 4 Feb 2024

The US dollar recorded a noticeable drop against the Egyptian pound in the parallel market, reaching approximately EGP 55 over the past few hours, down from a recent peak of EGP 72 in the past few days, according to media reports.

dollar
File Photo: shows Egyptian pound and US dollar banknotes. AFP

 

Currently, the official rate of the US dollar is almost EGP 31.

Many reports attributed the decline in the parallel market to the circulating news about an imminent injection of dollar liquidity into local banks as part of a set of investment projects in the making.

The drop was also attributed to the Central Bank of Egypt’s (CBE) hiking of the interest rates by 2 percent – a bid by which the CBE aimed at reining in the persistently high inflation. 

Other reports also linked the USD-EGP decline to the IMF’s recent statement that Egypt and the global lender are nearing a new financial support package and the EU’s approval of providing Cairo with extra financial assistance

Economic experts interviewed by Ahram Arabic Gate expected further depreciation of the USD in the parallel market due to an anticipated influx of hard currency, including the expected financial assistance from the IMF and the EU and the entry of Arab and Gulf investments into Egypt.

The experts have also urged the government to proceed with its plan to boost exports, aiming for an annual target of approximately $100 billion.

Meanwhile, gold prices declined across different categories for the second day in Egypt.

On Sunday, the different categories registered an average decline of EGP 400.

The 24-carat gold dropped to EGP 4,000 per gram, the 21-carat dropped to EGP 3,500 per gram, and the 18-carat to EGP 3,000 per gram, according to specialized website Isagha.

The gold pound also fell by some EGP 3,200 EGP, recording EGP 28,000 for purchase.

Since February 2022, Egypt has been grappling with a hard currency crunch driven by the global and domestic ramifications of the war in Ukraine and the global supply chain crisis.

Tens of billions of dollars in hot money fled the local market as investors sought higher interest rates elsewhere.

As a result, the CBE applied three waves of devaluation of the local currency since March 2022, driven by the Russian-Ukrainian conflict.

The government also declared a plan to collect $191 billion through 2026 by gradually expanding its initial public offering (IPO) program and introducing additional incentives for foreign investors, such as tax exemptions and golden licences.

Furthermore, the country has been engaging in a $3 billion loan programme, with ongoing negotiations on augmenting the programme.  No further details were revealed about the new loan, but circulating reports put the figure between $6-10 billion, up from the previously $3 billion loan.

The local market is also anticipating a fourth wave of devaluation of the local currency against the US dollar.

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