On Wednesday, interbank transactions in US dollars rose to a range between $650 and $750 million for the first time in months, according to a banking source who spoke to the Middle East News Agency (MENA). This increase was due to strong foreign currency inflows from major international institutions who returned to invest in the Egyptian market after a long absence. This confirms that the international business community has regained trust in the Egyptian economy and its recent monetary policy measures.
The exchange rate market has also seen a large movement in recent days due to concessions on foreign currency by customers of local banks. This was following the introduction of savings certificates with a return of 25% annually and 22.5% monthly. The issuance of these certificates has contributed to an increase in the dollar supply, leading to a decline in the dollar’s value at the end of Wednesday’s trading to less than EGP 30.
Furthermore, Arab exchange companies have transferred a good amount of dollar inflows to currency exchange affiliated companies such as Banque Misr and National Bank of Egypt (NBE). The global depository receipts (GDR) of Egyptian companies have also been repriced in the international stock market at the official rates of the dollar in banks, which enhances indirect foreign investment flows in Egyptian securities.
The source also expects that the dollar will witness a huge sell-off by foreign investors and local customers who have confidence in the reform steps led by the Central Bank of Egypt (CBE) to correct market conditions. Overall, the recent increase in interbank transactions and foreign currency inflows can be seen as a positive sign for the Egyptian economy, indicating that international investors have regained trust in the country’s stability and growth prospects.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.