The US dollar saw a slight increase against the Egyptian pound at the close of banking transactions on Thursday, following a period of relative stability and decline over the past few days. This movement comes within the framework of the flexible exchange rate system adopted by the Central Bank of Egypt, which allows market supply and demand forces to determine the value of the local currency.
The economic context and the decision to liberalize the exchange rate
These exchange rate fluctuations stem from the historic decision made by the Central Bank of Egypt on March 6, 2014, to fully liberalize the Egyptian pound's exchange rate, a move known as a "managed float." This decision was part of a broader package of economic reforms aimed at addressing distortions that had plagued the Egyptian economy for years, most notably the existence of a parallel (black) currency market where the dollar's price significantly exceeded the official rate. The decision to liberalize the exchange rate coincided with a 600-basis-point increase in interest rates, a preemptive measure to curb anticipated inflation.
The importance of the event and its expected impact
The flexible exchange rate system aims to eliminate the parallel market and unify the exchange rate, thereby enhancing transparency and attracting both direct and indirect foreign investment. This move, bolstered by a major investment deal in the Ras al-Hikma area with the United Arab Emirates, has provided significant dollar liquidity to the Egyptian economy, helping to stabilize the market in the initial period following the flotation. The current slight fluctuations, such as today's rise, are considered normal under this new system, as the exchange rate is influenced by multiple factors, including investment inflows, remittances from Egyptians working abroad, export earnings, and demand for dollars from importers.
Dollar exchange rates in major Egyptian banks today, Thursday
The following are the details of the dollar exchange rates in a number of public and private banks at the end of trading:
- The Central Bank of Egypt: The dollar recorded a price of 46.89 Egyptian pounds for buying and 47.03 Egyptian pounds for selling.
- National Bank of Egypt: The dollar was priced at 46.91 Egyptian pounds for buying and 47.01 Egyptian pounds for selling.
- Bank of Egypt: The dollar price recorded 46.91 Egyptian pounds for buying and 47.01 Egyptian pounds for selling.
- Bank of Alexandria: The dollar recorded a price of 46.90 Egyptian pounds for buying and 47.00 Egyptian pounds for selling.
- Commercial International Bank (CIB): The dollar was priced at 46.91 Egyptian pounds for buying and 47.01 Egyptian pounds for selling.
- Suez Canal Bank: The dollar price stabilized at 46.91 Egyptian pounds for buying and 47.01 Egyptian pounds for selling.
- Faisal Islamic Bank: The dollar was priced at 46.92 Egyptian pounds for buying and 47.02 Egyptian pounds for selling.
- Abu Dhabi Islamic Bank: The dollar was priced at 46.95 Egyptian pounds for buying and 47.05 Egyptian pounds for selling.
Investors and citizens alike monitor these daily movements in the exchange rate, as they are directly reflected in the prices of goods and services, the cost of imports, and the purchasing power of citizens, making it a vital indicator of the health and performance of the Egyptian economy.
