The US dollar saw a slight decline against the Egyptian pound at the close of trading on Monday in most public and private banks operating in Egypt. This movement comes amid the daily fluctuations the exchange market has witnessed since the Central Bank of Egypt's decision to fully liberalize the exchange rate in March 2014.
Background to the decision to liberalize the exchange rate
In a historic move aimed at addressing economic distortions and eliminating the parallel currency market, the Central Bank of Egypt announced on March 6, 2024, the adoption of a flexible exchange rate system, allowing the value of the Egyptian pound to be determined by supply and demand. This decision, which coincided with an exceptional interest rate hike of 600 basis points, led to an immediate depreciation of the pound, with the dollar jumping from around 31 pounds to over 49 pounds in the official market, approaching its black market levels, which gradually disappeared after the decision. These measures were part of a broader package of economic reforms aimed at restoring macroeconomic stability, attracting foreign direct investment, and securing a large-scale financing package from the International Monetary Fund.
The importance of exchange rate stability and its impact
The stability of the dollar exchange rate is of paramount importance to both the Egyptian economy and its citizens. Domestically, the exchange rate directly impacts inflation rates, as Egypt relies heavily on imports of essential commodities and raw materials, such as wheat, fuel, and industrial production components. Consequently, any increase in the dollar's value leads to higher import costs, which is reflected in the prices of final goods and services for consumers. Internationally, a stable exchange rate is a strong indicator of foreign investor confidence in the Egyptian economy, encouraging further investment that contributes to job creation and increased foreign currency reserves. Furthermore, the success of a flexible exchange rate policy is a key focus for international financial institutions, such as the IMF and the World Bank, and enhances Egypt's credit rating.
Dollar exchange rate in major Egyptian banks today, Monday
Below are the details of the dollar exchange rates in a number of major banks at the end of trading today:
- The Central Bank of Egypt: The buying price was recorded at 46.82 Egyptian pounds, and the selling price at 46.96 Egyptian pounds.
- National Bank of Egypt: The buying price was 46.86 Egyptian pounds, and the selling price was 46.96 Egyptian pounds.
- Bank of Egypt: The buying price was recorded at 46.86 Egyptian pounds, and the selling price at 46.96 Egyptian pounds.
- Commercial International Bank (CIB): The buying price was 46.83 Egyptian pounds, and the selling price was 46.93 Egyptian pounds.
- Bank of Alexandria: The buying price was recorded at 46.83 pounds, and the selling price at 46.93 pounds.
- Abu Dhabi Islamic Bank: The buying price was 46.93 pounds, and the selling price was 47.03 pounds.
