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Pound to depreciate to EGP 9.5 to US dollar by end of 2016: Standard & Poor’s - Daily News Egypt

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Pound to depreciate to EGP 9.5 to US dollar by end of 2016: Standard & Poor’s

The Central Bank of Egypt (CBE) devaluated the pound by 13% in March 2016, which hints at further devaluations, according to Standard & Poor's.


Bankers agreed with Standard & Poor’s predictions that the Egyptian pound will continue to depreciate against the US dollar on the official market to reach EGP 9.5 at the end of 2016, EGP 10 in 2017, EGP 10.5 in 2018, and EGP 11 at the end of 2019.

The company issued a report last week highlighting the pound’s depreciation by 25% since January 2015 to date. The Central Bank of Egypt (CBE) devaluated the pound by 13% in March 2016, which hints at further devaluations, according to Standard & Poor’s.

These predictions are realistic, the assistant general manager in the financial sector at a private bank operating in Egypt, said Osama El-Menilawy.

He explained that the government’s borrowing in US dollars or offering three-year dollar certificates means that it does not expect a flow of hard currency before those three years are up, indicating further pressure on the pound.

Ezz El-Din Hassanein, a banking and economic expert and a general manager at an Arab bank in Egypt, said that expectations forecasting that the pound will depreciate to EGP 11 against the US dollar by 2019 may be conservative.

According to Hassanein, the price of the US dollar against the Egyptian pound may register over EGP 11 in the coming year. The CBE is likely to partially flow the pound over several phases to reach a fair price based on its monetary policy, which is undoubtedly more than EGP 10.

Tamer Youssef, head of the treasury at a foreign bank operating in the domestic market, was sceptical about the timing of the report.

The CBE is awaiting US dollar deposits from the United Arab Emirates and Saudi Arabia before the end of June to strengthen its foreign reserves, which could support the pound against the dollar, he said.

According to Youssef, if the expectations were fuelled by the level of foreign reserves at the CBE and by doubts about the continuity of the Gulf support to Egypt, the agency should have waited until the end of the month for further clarification to issue the report.

 

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https://wwww.dailynewssegypt.com/2016/05/21/pound-depreciate-egp-9-5-us-dollar-end-2016-standard-poors/
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