Pound floating raises mobile, computer prices and slows down sales
The Central Bank of Egypt (CBE) announced their decision to float the Egyptian pound last week, which has raised the US dollar price in the official market. This decision also caused an increase in the prices of imported electronics, as the higher dollar exchange rate also raised the cost of imports after custom fees increased as a result of liberating the exchange price.
According to Maged Farouk, head of Comic Computers, floating the pound will increase the cost of imports which will then increase computer prices by 30-40%. He believes that rising computer prices will slow the growth of the computer market in the coming period.
Mohamed Salem, chairperson of Sico Technology, said the decision to float the pound will increase prices in the coming period. However, it will not affect the purchase rates as they automatically dropped during the past period and therefore are unlikely to fall again, he stated.
Salem expected that sales will continue to slowdown in the coming period until the US dollar price is fixed, as the current prices are exaggerated at an exchange rate of EGP 17-17.80 though the CBE advisory rate is EGP 13.
He believes that computers are an essential commodity; hence, the coming period will witness a growth in the sale of used devices.
The mobile phone market witnessed high price increases, because companies headed to the parallel market to buy dollars. As the US dollar’s price against the Egyptian pound increased in the unofficial market, mobile phone prices also went up.
With the flotation of the pound, Egyptian banks are supposed to provide dollars to companies at a new price; however, the CBE is still using the old controls that provide dollars to importers of basic commodities and determining the deposit value for importers of nonessential goods at $50,000 per month. These old controls increase import difficulties and raise import costs as a result of the increase in customs fees, which mean a new increase in mobiles prices.
According to Mahmoud Farouk, owner of a mobile shop in downtown Cairo, it is expected that mobile prices will increase by almost 30% during the coming period due to the higher costs of imports. He added that manufacturers of mobile phones had raised prices on a weekly basis by 5-11% before the decision to float the pound due to the unavailability of the dollar in banks and its price in the unofficial market.
He believes that the coming period will witness an increase in the sales of used phones at low prices, pointing out that mobile phones have become a commodity.
Many mobile phone companies started to increase their prices this week. Nokia raised some of its products by 9.6%, as the Nokia 105 SS model increased from EGP 305 to EGP 335, while Nokia 230 went from EGP 875 to EGP 960.
Additionally, Infinix raised the prices of its products by 6-7%, as the price of the Infinix Hot S (16G) increased from EGP 2,430 to EGP 2,600, and Infinix Zero 3 (16G) went from EGP 3,240 to EGP 3,465.
Source: Daily News Egypt
