The US dollar saw a slight decline against the Egyptian pound at the close of trading on Monday in Egyptian banks, continuing the relative stability the banking market has witnessed recently. This movement follows the Central Bank of Egypt's historic decision to float the exchange rate in March 2014, a move aimed at eliminating the parallel market and unifying the exchange rate.
The general context of the decision to liberalize the exchange rate
Prior to March 6, 2024, the Egyptian economy faced significant challenges, primarily the existence of two exchange rates for the US dollar: an official rate at banks and a much higher rate on the parallel market (black market). This situation led to a severe shortage of foreign currency, hindered investment flows, and created market uncertainty. To address these challenges, the Central Bank of Egypt took the bold step of raising interest rates by 600 basis points and allowing the exchange rate to be determined by market supply and demand. This decision followed the government's announcement of a major investment deal with the United Arab Emirates for the Ras al-Hikma project, which provided substantial dollar liquidity that supported this reform initiative.
The importance of exchange rate stability and its expected impact
The stability of the Egyptian pound's exchange rate against the US dollar is a vital indicator of the health of the Egyptian economy. Domestically, the exchange rate directly impacts inflation rates, as its stability or decline helps curb the prices of imported goods, thus easing the burden on citizens. Furthermore, a flexible and transparent exchange rate encourages foreign direct investment and strengthens international investor confidence in the Egyptian economy. Regionally and internationally, Egypt's success in achieving monetary stability enhances its position as a regional economic hub, supports its ability to meet its external obligations, and increases the competitiveness of its exports and products in global markets.
Dollar exchange rates in major Egyptian banks today, Monday
Below are the details of the dollar exchange rates in a number of Egyptian banks at the end of trading today:
- The Central Bank of Egypt: The buying price was recorded at 47.46 Egyptian pounds, and the selling price at 47.60 Egyptian pounds.
- National Bank of Egypt: The buying price was 47.50 Egyptian pounds, and the selling price was 47.60 Egyptian pounds.
- Bank of Egypt: The buying price was recorded at 47.48 Egyptian pounds, and the selling price at 47.58 Egyptian pounds.
- Commercial International Bank (CIB): The buying price was 47.49 Egyptian pounds, and the selling price was 47.59 Egyptian pounds.
- Bank of Alexandria: The buying price was recorded at 47.49 Egyptian pounds, and the selling price at 47.59 Egyptian pounds.
- Abu Dhabi Islamic Bank: The buying price was 47.52 pounds, and the selling price was 47.62 pounds.
- Suez Canal Bank: The buying price remained stable at 47.47 Egyptian pounds, and the selling price at 47.57 Egyptian pounds.
These figures reflect a significant convergence in prices between different banks, which is a key feature of the market after the unification of the exchange rate, where competition and supply and demand mechanisms have become the main determinant of prices.
