Cairo – Mubasher: The Egyptian pound has been recently stable at 18 per US dollar for about a year, after halving in value since the currency float in November 2016, according to a recent report by Bloomberg.
Foreign holders of the North African nation’s debt instruments have been using the open currency market to get dollars, the news agency highlighted.
Accordingly, this reflects that foreign holders are more comfortable to get cash out of the Arab world's most populous country, which indicates that the days of a stagnant Egyptian pound might be numbered, the report noted.
“About 20% to 30% of debt-related foreign currency trades are going through the open market,” people told Bloomberg.
The steep hard currency shortage in Egypt had made it almost impossible for overseas investors to repatriate profits, the report added.
“The crisis prompted policy-makers to float the currency and lift most restrictions in late 2016, but it has taken months for investors to build enough confidence to forgo their money-back guarantee,” the report continued.
“With more investors injecting dollars into the interbank market, the Egyptian pound’s volatility will probably rise,” senior economist at Standard Chartered Bank Bilal Khan commented, adding that “market forces will have a bigger role in determining the exchange rate than before.”
In November 2016, the Central Bank of Egypt (CBE) had to liberalise the exchange rate of the EGP against the US dollar in accordance with the market’s supply and demand forces.
