The dollar in Egypt reaches 32 pounds…the losses continue without stopping so far. By

© Reuters. – The price of Egyptian banks has now exceeded 31 pounds per dollar, while the rest of Egyptian banks are moving upwards in the meantime. On the forex screen, the dollar against the pound is recorded at 31.500.

The pound is now recording levels of 32.1 against the dollar in Abu Dhabi Islamic Bank in the latest update of the bank’s price screen, and it has also recorded levels of 31.9 pounds per dollar in HSBC Bank. In the National Bank, it reached levels of 31.8 per dollar.

Thus, the Egyptian pound has lost more than 84 percent since March 2022, according to Refinitiv data.

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This comes in the wake of the International Monetary Fund’s issuance yesterday of a report on the financial situation in Egypt and the publication of directives for the economy, the most important of which was the central support for the flexibility of the Egyptian currency against foreign currencies without interference from the central except in cases of high volatility, as well as the assertion that fuel prices will not be reduced before a full recovery. Fuel subsidy value. In addition to the fuel pricing mechanism, there will be a mechanism for pricing domestic gas, making it reflect international prices.

In another context, some types of green taxes that raise the actual carbon price are being studied, thus limiting the reduction of emissions.

The bank revealed that it had stopped directly allocating dollars from its reserves in favor of government agencies that had to resort to the market so that the price of the pound would reflect the volume of demand for the currency.

The Minister of Finance comments on the economic situation

The Egyptian Minister of Finance, Mohamed Maait, denied the government’s intention to impose any new taxes and affirmed Egypt’s commitment to the tax path that stimulates domestic and foreign investments, with the aim of moving the economy forward in a sustainable manner, stressing that there is no intention to impose new taxes on economic activities, and there is no prejudice to the tax rate. Commercial and industrial profits.

Maait Wazir said that a bill is currently being prepared to end all old tax files, stressing that the state does not wish to enter into tax disputes with the business community.

Despite the global economic stumbling blocks, Moati Moati said that Egypt aims during the fiscal year 2023/2024 to reduce the budget deficit to be at levels of 5% in the medium term, with targeting a decline in indebtedness to less than 80% of GDP by the end of 2027.

Downward projections up to 32

HSBC said the current round of currency devaluation is part of a long-anticipated campaign to rebalance Egypt’s external accounts after last year’s external shocks.

In a recent research note, HSBC Bank raised its expectations for the price of the dollar against the pound, likely to record 32.5 pounds on average in the near term, compared to 26 pounds in previous expectations.

The report indicated that the continued decline of the pound in the near term is due to the increase in the very high financing needs of the dollar and the relatively low capital inflows in this period.

HSBC Bank added that the decision to raise the interest rate came to accommodate the decrease in the exchange rate, as the Central Bank decided to raise the interest rate by 3% last December.

The bank pointed out that the Central Bank of Egypt maintained the inflation rate in the near term at 7% (+/- 2), targeting its descent to 5%, with an increase or decrease of 2% during the fourth quarter of 2026.

HSBC Bank said that the central bank began to switch to a flexible exchange rate, as stated in the International Monetary Fund statement, and this was demonstrated by financing documentary credits for the release of goods stacked in ports.

The Central Bank of Egypt announced the adoption of an exchange rate policy twice, the first in March, and raised the interest at that time by 200 basis points, and the second in October 2022, and raised the interest at that time by 300 basis points.

Egypt and the IMF

Last December, the IMF approved a $3 billion loan for Egypt within a 46-month program, allowing Egypt to access additional $1.3 billion in financing from the Resilience and Flexibility Trust Fund mechanism.

The fund’s loan is scheduled to be disbursed in 9 semi-annual tranches, at a value of 261 million special drawing rights units, in conjunction with Egypt’s payment during that period of a large part of the fund’s dues to it, so that the percentage of the fund’s financing for its share in it at the end of the program period will decrease to 236%, compared to 662% at its beginning.

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