The US dollar embarked on a new wave of decline against the pound and lost the equivalent of about 20 piastres of its value on Monday and Tuesday. The greenback settled on EGP 17.8285 for buying and EGP 17.9543 for selling, compared to EGP 18.0276 for buying and EGP 18.1518 for selling on Sunday.
In banks, the dollar was changing hands on Tuesday at EGP 17.8-17.9 for buying and EGP 17.9-18 for selling.
This value is the lowest against the Egyptian pound since mid-March 2017.
Chairperson of Banque Misr Mohamed El-Etreby said that there is great supply of the dollar at banks, which is leading to this depreciation in its value against the Egyptian pound.
He told Daily News Egypt that the interbank market is seeing great activity, as many banks have been injecting more funds after covering the demand of their clients of hard cash.
Moreover, he added that the large difference between the interest rate on savings in pounds and the dollar’s interest pushed many people to convert their dollar savings into pounds, which increased the supply of the greenback.
He predicted the dollar to continue its depreciation wave in the coming period amid increasing supply.
El-Etreby pointed out that Banque Misr collected $2.7bn from clients since the flotation of the pound on 3 November 2016.
Vice chairperson of the National Bank of Egypt (NBE) Yehia Aboul Fotouh said that all indicators point to further depreciation.
He explained that the depreciation is mainly caused by growing supply of hard currency at banks.
He added that there has been a significant increase in the foreign exchange at banks since the flotation, noting that NBE alone collected $9.5bn.
According to Aboul Fotouh, the increasing collection of dollars from clients in Egypt and through remittances—which amounted to $25bn across the banking sector—is coupled with more financial packages worth $25bn, as well as the dollar dominated bonds issued by the government recently. In addition, he noted that foreign direct and indirect investments and proceeds from exports have also contributed to the supply growing.
On the other hand, he pointed out that import demand has declined, which eased demand on the dollar.
In a related context, a senior banker told Daily News Egypt that the banks started to give their customers cash liquidity of up to $2,000 without asking for any documents, depending on the precedent of dealing between the bank and its clients.
Banks had placed strict restrictions on customers’ access to the dollar either for travel or for other purposes.