The exchange rate of the US dollar against the Egyptian pound witnessed a slight increase at the close of trading on Sunday in Egyptian banks, continuing the fluctuating trend it has followed since the Central Bank's decision to fully liberalize the exchange rate in March 2014. This change comes within a new economic context aimed at achieving monetary stability and attracting foreign investments.
Dollar exchange rates in major Egyptian banks today
Dollar exchange rates at major banks remained relatively close, and the following are the latest recorded rates:
- The Central Bank of Egypt: The buying price was recorded at 47.74 Egyptian pounds, and the selling price at 47.88 Egyptian pounds.
- National Bank of Egypt: The buying price was recorded at 47.75 Egyptian pounds, and the selling price at 47.85 Egyptian pounds.
- Bank of Egypt: The buying price was recorded at 47.75 Egyptian pounds, and the selling price at 47.85 Egyptian pounds.
- Commercial International Bank (CIB): The buying price was recorded at 47.77 Egyptian pounds, and the selling price at 47.87 Egyptian pounds.
- Bank of Alexandria: The buying price was recorded at 47.65 pounds, and the selling price at 47.75 pounds.
- Qatar National Bank (QNB): The buying price was recorded at 47.75 Egyptian pounds, and the selling price at 47.85 Egyptian pounds.
Background to the decision to liberalize the exchange rate
These daily fluctuations in the exchange rate would not have been possible before the Central Bank of Egypt's historic decision on March 6, 2014, to allow the exchange rate to be determined by market supply and demand. This decision was a crucial step within a broader economic reform program aimed at addressing the distortions that had plagued the Egyptian economy for years, most notably the existence of a parallel (black) market for currency, which created a significant gap between the official and real exchange rates. This measure, preceded by a 600-basis-point interest rate hike, was a prerequisite for securing a large-scale financing package from the International Monetary Fund and bolstering international investor confidence.
Importance and expected impacts on the Egyptian economy
The decision to float the Egyptian pound holds strategic importance for the Egyptian economy on several levels. Domestically, the decision aims to completely eliminate the parallel currency market, thus making dollars available through official channels (banks) and facilitating transparent access to foreign currency for importers and businesses. While this move has led to an initial wave of inflation due to the increased cost of imported goods, in the long run it will contribute to price stability and curb inflation. It also encourages Egyptians working abroad to transfer their remittances through banks rather than the black market, thereby increasing the country's foreign currency reserves.
Regionally and internationally, this decision has strengthened Egypt's position as an attractive investment destination. Its first fruits appeared in the announcement of a massive investment deal with the UAE to develop the Ras al-Hikma project, which injected tens of billions of dollars into the Egyptian economy. Furthermore, unifying the exchange rate provides foreign investors with a clear and reliable view of the costs and returns on their investments, removing one of the biggest obstacles they previously faced. The continued influx of investments and dollar liquidity is expected to stabilize the Egyptian pound and contribute to sustainable economic growth.
