Egyptian pound falls to 5-year low

Ahram Online, Thursday 23 Dec 2010

Weak euro causes the Egyptian pound to fall to its lowest level against the dollar in five years

Egyption pound

The Egyptian pound continued to fall against the dollar, crossing the LE5.80 mark.

Since the beginning of the year, the pound has depreciated against the dollar by 5.82 per cent.

The Egyptian pound was stable from May to October 2010 when the Greek budget deficit caused the euro to depreciate against the dollar. This, according to Beltone Financial investment bank, had repercussions here.

Ireland`s debt problem in the last quarter of 2010 further weakened the euro and the resulting strengthened dollar placed more pressure on the Egyptian pound.

The Christmas holiday period is another potential factor affecting the Egyptian pound as foreign investors drop it infavour of greater liquidity, explains Beltone Financial.

The income from tourism, remittances sent home by Egyptians abroad, the Suez Canal and foreign investments ensure there is a flow of foreign currency in the domestic market. This, according to Beltone, will curb the Egyptian pound's depreciation against the dollar.

Analysts at the investment bank predict this downward trend to reverse slightly in 2010/2011. "The Egyptian pound will appreciate and the dollar will reach an average of LE5.75."

They expect the following year to follow another path with the dollar reaching LE5.90 due to an augmentation in the current account deficit.

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