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Egypt devalues pound against US dollar

by ChemOrbis Editorial Team -
  • 19/10/2015 (15:44)
According to media reports, the Central Bank of Egypt (CBE) devalued the pound against the US dollar on October 18 for the second time in a week. The country’s central bank weakened the pound at an auction, dropping the value from 7.83 to 7.93 pounds per dollar, the lowest level since the central bank began its auctions in December 2012.

Following the devaluation, the dollar broke above the EGP 8 threshold in banks and exchange companies operating in the Egyptian market for the first time while rising to EGP 8.40 in the black market. In a tender held by the CBE, meanwhile, the dollar reached EGP 8.03 for sale at banks and exchange companies and EGP 7.98 for buying.

The CBE devalued the pound at the request of the International Monetary Fund (IMF) as the IMF asserts that the Egyptian pound is overvalued against the US dollar. According to some analysts, Egypt’s foreign investments may increase following the new rates as investors and economists also think that the pound is overvalued. Meanwhile, traders are currently waiting for the bank’s next step as they feel that a further devaluation of the pound is possible.

According to some analysts, the dollar’s price will likely increase to EGP 8.25 against the Egyptian pound in three months and to EGP 8.5 by the end of the first half of 2016.
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