The US dollar saw a notable decline against the Egyptian pound at the start of trading on Thursday, as the Egyptian pound continued its upward trend of recent weeks. The exchange rate of the US currency fell below 47 pounds in most Egyptian public and private banks, an indicator reflecting improved foreign currency inflows and a return of confidence in the local economy.
Historical background and economic context
This exchange rate stability comes after a period of sharp fluctuations in the Egyptian economy, which peaked in early 2024. In previous years, Egypt suffered from a shortage of foreign currency, leading to the emergence of a parallel market (black market) where the dollar reached record highs exceeding 70 Egyptian pounds. To address this crisis, the Central Bank of Egypt made a historic decision on March 6, 2024, to fully float the Egyptian pound, allowing it to be determined by market forces of supply and demand, while simultaneously raising interest rates by 600 basis points in a single move. The aim of this measure was to eliminate the parallel market and unify the exchange rate, a goal largely achieved by the monetary authorities.
The importance of the event and its expected impact
The decline in the dollar's value and the stabilization of the Egyptian pound have far-reaching implications across various sectors. Domestically, the lower dollar helps curb inflation, as Egypt imports a significant portion of its essential needs, such as wheat, fuel, animal feed, and production inputs, all of which are priced in dollars. Therefore, reduced import costs will positively impact the prices of finished goods for consumers, easing the financial burden on citizens. Furthermore, a stable exchange rate provides a clearer operating environment for businesses and investors, enabling them to plan for their future with greater confidence.
At both the regional and international levels, these developments have bolstered the confidence of foreign investors and international financial institutions in the Egyptian economy. This confidence has been reinforced by massive investment deals, most notably the Ras al-Hikma project development agreement with the United Arab Emirates, which has injected tens of billions of dollars into the Egyptian economy. These reforms have also paved the way for an increased loan from the International Monetary Fund, providing additional dollar liquidity and technical support for Egypt's economic reform program.
Dollar exchange rates in major Egyptian banks today
- The Central Bank of Egypt: The dollar recorded a price of 46.85 Egyptian pounds for buying and 46.98 Egyptian pounds for selling.
- National Bank of Egypt: The dollar was priced at 46.88 Egyptian pounds for buying and 46.98 Egyptian pounds for selling.
- Bank of Egypt: The dollar price recorded 46.88 Egyptian pounds for buying and 46.98 Egyptian pounds for selling.
- Commercial International Bank (CIB): The dollar was priced at 46.85 Egyptian pounds for buying and 46.95 Egyptian pounds for selling.
- Bank of Alexandria: The dollar recorded a price of 46.78 Egyptian pounds for buying and 46.88 Egyptian pounds for selling.
- Abu Dhabi Islamic Bank: The dollar was priced at 47.03 Egyptian pounds for buying and 47.12 Egyptian pounds for selling.
