According to the data of the Central Bank of Egypt, the average price of the dollar recorded an increase of about 16 piasters during the past week, reaching 18.51 Egyptian pounds for purchase and 18.61 Egyptian pounds for sale, the highest level since February 2017, but prices calmed down to levels ranging between 18.45 and 18. 52 pounds per US dollar.
Despite the tightening of penalties on currency trading outside banks and exchange companies, the price of the dollar in what is known as the “black market” is rising by more than the usual rates with the increase in demand for it after the rise in various banks, and some companies’ attempt to provide it to pay their financial dues.
Banking expert Hani Aboul Fotouh attributed the recent increase to supply and demand driven by import requests and the rush of importers to open documentary credits before the official holidays and successive holidays in which banks are disrupted for several days.
Aboul Fotouh explained, in statements to Sky News Arabia, that the average rise in the dollar a few days ago in Egyptian banks amounted to about 8 piasters, but it is not seen as a “big leap”, but rather within the normal movements of supply and demand.
The banking expert expected that the dollar exchange rate would decline again, but by a small percentage after the holidays.
According to the official agency in Egypt, the value of import operations carried out by local banks in Egypt, during the period from March 8 to April 7, amounted to about $7.4 billion, to finance about 34,500 import operations.
The industrial sector accounted for more than 66 percent of companies’ import operations, with a value of about $5 billion.
A banking source in one of the Egyptian banks indicated to “Sky News Arabia” that the priority for opening documentary credits is to purchase basic commodities and medicines, then “entertainment” goods, according to him.
He explained that the banks’ identification of these priorities comes to rationalize the use of the dollar, as a result of the high import cost in the recent period, as well as according to the volume of foreign exchange supply.
In turn, economic analyst Ahmed Ezz said, in statements to Sky News Arabia, that one of the factors affecting the price of foreign currency in Egypt is the future expectations of investors, which will subsequently contribute to an increase in commodity prices in the country, pointing out that there are basic internal economic motives that push the price of the dollar to increase. However, what increases this price is the expectations for the consumer and investment side.
He pointed out that there are a number of dollar sources for Egypt, topped by remittances from workers abroad, Suez Canal revenues, and exports, but some of them suffer from crises during the last period, and this affected the foreign exchange reserves.
He added, “The main sustainable source of foreign currency availability is production, but we suffer from a problem during the past years before the state intervenes to treat it so that the indicators turn positive, but it remains difficult to treat it radically in the short term,” explaining that the current period is a great opportunity to increase exports and achieve Self-sufficiency and import reduction.
The cash reserves of foreign currencies declined to 37.082 billion dollars at the end of last March, compared to 40.99 billion dollars at the end of the previous February, which the Central Bank attributed to the use of part of these reserves to cover the Egyptian market’s foreign exchange needs and to cover the exit of foreign investments and international portfolios, in addition to guaranteeing imports. Strategic goods and the payment of the state’s external obligations.
Ezz expected the dollar’s price to continue to rise, adding: “It will not be a big increase, and it will remain within 25 piasters this year, so that there will be stability in the dollar’s price against the pound.”
He also expected that the Central Bank of Egypt would intervene again to raise the interest rate at its meeting next month, which might affect a slight increase in the price of the dollar.
But Aboul Fotouh does not see this, as he says that raising interest rates will attract dollar holders to abandon it, and reduce dollarization.