USD/EGP forward contracts reach all-time high at EGP 63

Asmaa Mostafa , Thursday 1 Feb 2024

The 12-month non-deliverable forward contracts for the Egyptian pound against the US dollar surged to an all-time high of EGP 63, with short-term contracts also following this upward trend, according to Bloomberg.

File Photo: USD bills. Al-Ahram
File Photo: USD bills. Al-Ahram


The new record-high level coincides with the Central Bank of Egypt's (CBE) Monetary Policy Committee (MPC) meeting to assess key interest rates on Thursday.

According to a Bloomberg survey, the CBE is anticipated to maintain the overnight deposit rate, overnight lending rate, and the rate of the main operation at 19.25 percent, 20.25 percent, and 19.75 percent, respectively.

Currently, the official rate of the US dollar is almost EGP 31, while the parallel market values the USD at around EGP 72.

To narrow this gap, the Egyptian government is preparing to devalue its currency for the fourth time, following three previous devaluations since March 2022, resulting in a depreciation of around 70 percent of the Egyptian pound's value.

The economic challenges faced by Egypt were triggered by the eruption of the Russia-Ukraine conflict and the subsequent outflow of $22 billion from the country, in addition to the ongoing global crises and geopolitical tensions.

Egypt is seeking additional funding to bridge a financing gap of $17 billion by 2026 and an estimated gap of $6 to $8 billion for the current fiscal year 2023/2024.

The country is currently engaged in a $3 billion loan programme with the International Monetary Fund (IMF), which requires adopting a flexible exchange rate.

An IMF mission is currently in Cairo to discuss the first and second reviews of Egypt's reform programme.

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