The US dollar exchange rate against the Egyptian pound witnessed remarkable stability during trading on Wednesday across various Egyptian public and private banks. This stability follows a period of significant fluctuations that ensued after the Central Bank of Egypt's decision in March 2014 to fully liberalize the exchange rate, allowing it to be determined by market supply and demand.
Historical background and context of the decision to liberalize the exchange rate
For years, Egypt suffered from a dual exchange rate system for the US dollar: an official rate at banks and a significantly different rate on the parallel (black) market. This led to a severe shortage of foreign currency and negatively impacted imports and investment. In a decisive move aimed at unifying the exchange rate and eliminating the parallel market, the Central Bank of Egypt decided on March 6, 2024, to raise interest rates by 600 basis points and allow the Egyptian pound to depreciate sharply to its true value against foreign currencies. This decision was a prerequisite for securing a large-scale financing package from the International Monetary Fund and major investment deals.
The importance of current stability and its economic impact
The current stability in the exchange rate is a positive indicator of the beginning success of the new monetary policies. This stability has been aided by substantial cash inflows following the announcement of the Ras al-Hikma investment deal with the United Arab Emirates, which injected $35 billion into the Egyptian economy, in addition to the increase in the value of the International Monetary Fund loan to $8 billion. These inflows have bolstered the Central Bank's foreign currency reserves and instilled significant market confidence and the ability to meet the demand for dollars.
Domestically, exchange rate stability helps curb inflation, particularly for imported goods, and provides a more stable business environment for companies and importers to plan their activities. Internationally, this stability boosts foreign investor confidence in the Egyptian economy and encourages the return of foreign direct and indirect investments, which is vital for achieving sustainable economic growth.
Dollar exchange rates in major Egyptian banks today, Wednesday
Here are the details of the dollar exchange rates in a number of major Egyptian banks today:
- Central Bank of Egypt: The buying price was recorded at 46.80 Egyptian pounds, and the selling price at 46.93 Egyptian pounds.
- National Bank of Egypt: The buying price was recorded at 46.84 Egyptian pounds, and the selling price at 46.94 Egyptian pounds.
- Bank of Egypt: The buying price was recorded at 46.84 Egyptian pounds, and the selling price at 46.94 Egyptian pounds.
- Bank of Alexandria: The buying price was recorded at 46.84 Egyptian pounds, and the selling price at 46.94 Egyptian pounds.
- Commercial International Bank (CIB): The buying price was recorded at 46.82 Egyptian pounds, and the selling price at 46.92 Egyptian pounds.
- Suez Canal Bank: The buying price remained stable at 46.86 Egyptian pounds, and the selling price at 46.96 Egyptian pounds.
- Abu Dhabi Islamic Bank: The buying price was 46.86 pounds, and the selling price was 46.96 pounds.
Analysts and citizens alike are closely monitoring the performance of the Egyptian pound, hoping that this stability will continue to reflect a real improvement in the country’s macroeconomic indicators in the coming period.
