CBE Fixes US Dollar, Ambiguity Remains Over 2 Previous Increases
The Central Bank of Egypt (CBE) stabilised Sunday the US dollar’s exchange rate against the Egyptian pound for the third time in a row, to stand at EGP 7.7301. The US dollar price against the Egyptian pound in banks stands at EGP 7.78 for buying and EGP 7.8301 for sale.
The dollar’s price rate reached this level last Sunday when the CBE increased the value by 20 piasters over two stages. The first raise of 10 piasters occurred on 2 July, with the second raise, of another 10 piasters, occurring last Sunday, with the CBE fixing its price.
“Fixing the dollar’s price by the CBE, after the sudden significant increase, is not understandable, and raises a lot of question marks about the reason behind raising the dollar’s exchange rate in the first place especially at this time,” says Ossama El-Manialawy, assistant general manager of the treasury department at a private bank.
El-Manialawy said that the CBE’s rise is a significant and unusual increase, which surprised the market. He added that these two steps gave the market the impression that it is possible to take similar steps again.
However, the market was surprised by the dollar’s price being fixed following the rise, which raises high ambiguity about the reason for raising the dollar in the first place and by such a high rate.
The CBE had launched three auctions a week for selling dollars to banks, on Sundays, Tuesdays, and Thursdays. Through these auctions, the CBE is able to control determining the dollar’s price at the banks and the exchange companies working in the local market.
However, the market was not satisfied by the justifications mentioned by CBE Governor Hisham Ramez regarding the increase of the US dollar against the Egyptian pound. Ramez’s justifications were focused on the bank’s keenness to minimise importing and protect local production.
Daily News Egypt published only recently an exclusive statement by a prominent banker, in which he asserted that the CBE intentionally reduces the value of the Egyptian pound to meet International Monetary Fund (IMF) requirements. The IMF believes that the value of the Egyptian pound against the US dollar is over its real level.
Source: Daily News Egypt
