05:07 PM
Sunday, March 10, 2024
Written by Manal Al-Masry:
International banks and institutions expected the exchange rate of the dollar against the pound to fall to between 42 and 45 pounds by the end of this year, down from the level of about 50 pounds that it reached during the first day of liberalizing the exchange rate.
HSBC, Morgan Stanley, and the Institute of International Finance expected the price of the pound to rise against the dollar during the current year after the International Monetary Fund raised the loan with Egypt to $8 billion and foreign exchange flows entered after the decision to liberalize the exchange rate.
After the Central Bank’s decision to return to the policy of liberalizing the exchange rate of the pound against foreign currencies last Wednesday, the price of the dollar rose from about 30.94 pounds to about 50 pounds before falling to about 49.1 pounds at the end of trading in some banks on Sunday.
The Central Bank’s decision came a few hours before the International Monetary Fund announced that it would raise the value of the loan provided to Egypt from $3 billion to $8 billion with the aim of supporting the Egyptian economic reform program.
Over the past two years, Egypt has suffered from a gap in the price of the dollar between the black market and the banks due to the scarcity of the currency in the banking sector, which necessitated the Central Bank’s return to exchange rate flexibility.
HSBC Bank
HSBC Bank maintained its previous expectations that the exchange rate of the pound against the dollar would stabilize in the range of 40 and 45 pounds until the end of the current year 2024, after liberalizing the exchange rate and easing restrictions imposed on foreign currency exchange.
In a report, a copy of which Masrawy received, the bank suggested that dollar flows would lead to the re-establishment of the interbank market – the interbank for buying and selling dollars between banks – and put an end to the parallel market.
The interbank market – an internal network between banks and the central bank – returned to buying and selling the dollar after the decision to liberalize the exchange rate, as the trading volume during the first two days of floating the exchange rate on Wednesday and Thursday reached about 1.9 billion dollars, which means an increase in foreign exchange resources, according to what bankers told Masrawy.
This contributed to the disappearance of the price gap between the black market and the banks as a result of the increased customer demand for selling the dollar in banks and ATMs after the liberalization of the exchange rate and the banks lifting the restrictions previously imposed on credit cards.
HSBC Bank said that raising the International Monetary Fund’s loan to Egypt from $3 to $8 billion will motivate Egypt to adhere to its pledges with the Fund, including a flexible exchange rate, in addition to the investment deal that was signed with the UAE worth $35 billion in February to develop the city of Ras El Hekma.
Institute of International Finance
The Institute of International Finance expects the average exchange rate of the pound to reach about 33.5 to the dollar in the current fiscal year 2023-2024, which ends next June, according to the “Eqtisad Al-Sharq” website.
The fiscal year in Egypt begins from the beginning of July until the end of June of the following year.
The institute expected that the average price of the dollar would reach 42.5 pounds to the dollar in the fiscal year 2024/2025, which is lower than the current price of 49.44 against the green currency, according to data from the Central Bank of Egypt.
The report of the International Institute, according to the “Eqtisad Al-Sharq” website, explained that the Ras Al-Hekma deal and the agreement with the Fund enhance the growth of foreign exchange resources and the increase in foreign exchange reserves.
A few days ago, Egypt received $10 billion from the Emirati company ADQ, the first payment in the Ras El Hekma city deal, in addition to settling a $5 billion deposit owed to the UAE by Egypt.
Within two months, Egypt is scheduled to receive $20 billion from the UAE, the second installment of the Ras El Hekma deal, including the settlement of $6 billion as a deposit owed by Egypt to the UAE, according to what the Prime Minister announced earlier.
Morgan Stanley Bank
Morgan Stanley, one of the international American banks, expected that the exchange rate of the pound against the dollar would stabilize at about 45 pounds during the next two months after the decision to liberalize the exchange rate.
The bank explained in a research paper, a copy of which was shown to Masrawy, that Egypt’s commitment to structural reforms within the framework of the International Monetary Fund program and the continued flexibility of the exchange rate helps maintain its expectations of Egypt’s commitment to a free exchange rate for the pound.
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