São Paulo – The Egyptian pound reached its strongest in more than two and a half years this Thursday (24), Al Ahram newspapers’ website reported. It strengthened further against the U.S. dollar, trading at EGP 16.10. Year-to-date, the pound has seen a steep climb in 2019, rising 9.85%. Analysts have said it was mainly boosted by higher foreign exchange inflows.
Since January, the dollar value has dropped EGP 1.5. Allen Sandeep, head of research at Naeem Brokerage, said he expects the pound to continue appreciating against the dollar through Q1 2020.
Mohamed Abu Basha, an economist at Egyptian investment bank EFG Hermes, said a strong pound would help maintain low inflation, which hit its lowest in almost seven years last month, and could potentially stimulate greater consumption.
Basha points out that a stronger local currency is not helping exports though, but the latter is a relatively much smaller part of the economy. Egypt’s Gross Domestic Product is over USD 230 billion and the country’s exports are around USD 30 billion.
The Central Bank of Egypt has relaxed the country’s exchange rate regime by the end of 2016 to leave the currency float freely in order to fight off the lack of dollars and help make the economy stable. This measure is part of an economic reform program tied to a USD 12 billion loan from the International Monetary Fund (IMF).
Translated by Guilherme Miranda
