Cairo - Mubasher: The Egyptian pound's recent depreciation will not add significant inflationary pressure as the US dollar remains below the record-high level of last December, Pharos Research said in a recent report.
Recently, the USD went up and approached the level of EGP 18, after a short decline that saw it reach levels below EGP 16.
The research firm said that the current decline of the Egyptian pound against the US dollar is no surprise.
Given the drop in sales volumes across various sectors, the potential for significant price increases, in reaction to the exchange rate movements, only exists if the USD approaches or exceeds the historical high level of EGP 19, Pharos explained in the report.
Foreign investors have purchased $300 million worth of EGP-denominated treasury instruments on Thursday, which should help avoid strong spikes in the exchange rate, the report indicated.
The Central Bank of Egypt (CBE) said on Wednesday that foreign investments in Egyptian debt instruments increased during the second quarter of fiscal year 2016/2017, totalling $631.7 million.
Both the monthly and core inflation rates recorded the slowest pace since the EGP flotation at 2.6% month-on-month, Pharos noted.
The annual inflation rate acceleration in February remains affected by a low base in the corresponding period of last year.
Accordingly, Pharos expects the impact of the base effect to diminish gradually, starting Q4-16/17.
The consumer price index (CPI) in Egypt grew nearly 30% year-on-year in January, as shown by the data of the Central Agency for Public Mobilization and Statistics (CAPMAS).
