Significant stability in the dollar exchange rate against the pound
The US dollar exchange rate against the Egyptian pound remained remarkably stable in trading on Tuesday across various Egyptian public and private banks, continuing the calm that has prevailed in the currency market for several weeks. This stability follows a period of significant fluctuations that ensued after the Central Bank of Egypt's decision to fully liberalize the exchange rate on March 6, 2014, a measure aimed at eliminating the parallel market and unifying the exchange rate.
Historical background: From fixing to full floating
Prior to the recent flotation decision, the Egyptian economy suffered for years from a dual exchange rate system: an official rate at banks, significantly lower than the dollar's true value, and a parallel (black) market rate reflecting actual supply and demand. This distortion exacerbated the foreign currency shortage and hindered foreign direct investment. The decision to float the currency was a crucial step within a broader economic reform program in cooperation with the International Monetary Fund, aimed at restoring balance to the foreign exchange market and boosting investor confidence. Significant cash inflows, most notably from the Ras al-Hikma investment project, contributed to providing dollar liquidity, which strengthened the Central Bank's ability to manage the market after the flotation.
The importance of exchange rate stability and its economic impact
Exchange rate stability is of paramount importance to the Egyptian economy on several levels. Domestically, currency stability helps curb inflation by stabilizing the cost of imported goods, which constitute a significant portion of the average Egyptian's consumption basket. It also provides businesses and manufacturers with a clear understanding of production costs and pricing, encouraging expansion and increased output. Internationally, a unified and stable exchange rate enhances Egypt's attractiveness as a destination for foreign investment, eliminating the risks of currency volatility that previously worried investors. This stability is expected to positively impact Egypt's credit rating and improve the perception of the Egyptian economy by international financial institutions.
Dollar exchange rates in major Egyptian banks today, Tuesday
Below are the details of the dollar exchange rates in a number of major banks operating in Egypt today:
- The Central Bank of Egypt: The buying price was recorded at 46.71 Egyptian pounds, and the selling price at 46.85 Egyptian pounds.
- National Bank of Egypt: The buying price was recorded at 46.74 Egyptian pounds, and the selling price at 46.84 Egyptian pounds.
- Bank of Egypt: The buying price was recorded at 46.74 Egyptian pounds, and the selling price at 46.84 Egyptian pounds.
- Commercial International Bank (CIB): The buying price was recorded at 46.74 Egyptian pounds, and the selling price at 46.84 Egyptian pounds.
- Bank of Alexandria: The buying price was recorded at 46.74 pounds, and the selling price at 46.84 pounds.
- Suez Canal Bank: The buying price remained stable at 46.70 Egyptian pounds, and the selling price at 46.80 Egyptian pounds.
- Faisal Islamic Bank: The purchase price was recorded at 46.72 pounds, and the selling price at 46.82 pounds.
- Abu Dhabi Islamic Bank: The buying price was 46.77 pounds, and the selling price was 46.87 pounds.
