CAIRO: The Egyptian pound posted one of its biggest daily gains in nearly six years on Thursday as investors sought riskier assets after the US Federal Reserve said it would buy billions of dollars in debt.
The pound traded at 5.72 to the dollar, rising about 1 percent from 5.7765 on Wednesday, dealers said, adding that it was one its highest one-day increases since the central bank relaxed restrictions on trading in the currency in early 2005.
"People are cutting their long US dollar positions and the very thin market exaggerates it," said a currency dealer based in London, adding there had also been inflows of dollars into pounds.
"We’ve seen some inflows," said another dealer based in Cairo.
A Cairo-based dealer said turnover was about $700 million, well above the Egyptian pound’s average daily trading volume of $400-500 million but a surprisingly small amount for such a large price movement.
The Egyptian pound benefited as investors globally headed into riskier assets after the US Federal Reserve announced plans to buy $600 billion in government debt to spur the US economy, pushing the dollar down broadly.
Traders said they would be watching closely in coming days to see if more foreign investors bought Egyptian pounds to see if the pound would remain at this level.
The pound was quoted during the day as high as 5.7100 to the dollar, although some traders said there was no transaction at that level.
