US dollar rate hits all-time high in parallel market in Egypt exceeding EGP 50/1 USD

Doaa A.Moneim , Thursday 16 Nov 2023

The US dollar rate hit new records in the currency parallel market, as it reached EGP 50/1 USD for small amounts ($1000-$1500) and around EGP 55/1 USD for greater amounts, the number of importers operating in the local market told Ahram Online.

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

With these record levels, the gap between the US dollar rate in the official market and the parallel market has significantly widened to over 26.5 percent.

For the current official rate, the US dollar is traded for almost EGP 31/1 USD.

The jump of the US dollar rate in the parallel market comes amid wide expectations that Egypt would apply a fourth wave of the local currency devaluation against the USD after the presidential race, scheduled between 10-12 December, is over. Moreover, the spike comes as the government has failed, so far, to contain the currency parallel market activity.

Egypt has devaluated its local currency three times since March 2022, in a bid to attract more investors to the suffering local market. The EGP depreciation causes the local currency to lose over 75 percent of its value against the US dollar as of yet.

The country is also suffering a severe US dollar liquidity crunch in the local market, as over $20 billion in hot money has fled the market seeking to benefit from the high interest rates the other markets offer as a result of their monetary policy tightening.

Dealing with the complicated economic scene in Egypt, the government announced a plan that aims to collect $191 billion through 2026making slow progress on its initial public offering (IPO) programme and introducing more incentives for foreign investors, such as tax exemptions and offering golden licenses.

Egypt is also racing time to fulfill its commitments under its $3 billion loan programme with the International Monetary Fund, chiefly applying flexible regimes for both exchange rates and interest rates, leveling up the field with the private sector, allowing the private sector to play a greater role in the national economy, and accelerating the IPO pace.

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