The US dollar has been notably falling against the Egyptian pound since the Central Bank of Egypt’s (CBE) governor stated that the USD/EGP exchange rate would see further volatility.
The USD exchange rate against the EGP slashed by EGP 0.63 or 3.53% since the CBE governor’s statement was revealed, according to the central bank ’s data.
The greenback recorded around EGP 17.24 for buying and EGP 17.35 for selling on Thursday, compared to EGP 17.87 for purchasing and EGP 17.96 per selling on 17 January.
The USD is likely to trade between EGP 17 and EGP 18 this year on the back of the state’s generous USD flows since the beginning of the year, economist Eman Negm told Mubasher.
The USD rate is expected to reach EGP 16 within the next two years, in line with the improvement of Egypt’s foreign revenues and the increase in foreign investments in sovereign debt, Negm said.
She stressed that the USD rate slipped after the Ministry of Finance (MoF) issued Eurobonds with three maturities worth a combined $4 billion, and the CBE has gotten EGP 4 billion from Egyptian investors.
She also highlighted that Egypt has got $15 billion as investment in treasury bills since the beginning of 2019.
Receiving the fifth tranche of the International Monetary Fund’s (IMF) $2 billion loan has boosted cash reserves and weighed on the USD exchange rate, Negm noted.
For his part, Hisham Ibrahim, professor of financing and investment at Cairo University, said that the EGP will maintain rising against the USD in the meantime due to the improvement of the Egyptian economy.
Ibrahim expected the USD to slash to EGP 16 within the next two years.
USD supply at national banks recently grew as tourism revenues and Egyptian expat remittances impacted the greenback performance, he highlighted.
Direct and indirect investments in the North African nation rose this year and Egyptian exports started to jump, which in return helped attract foreign investments, Ibrahim highlighted.
He emphasised that minimising imports since the liberalisation of the exchange rate has pushed the USD rate down against EGP.