Egyptian players: Exchange rates rise in black market
This recent depreciation of the Egyptian pound in the black market stemmed from speculations that the Central Bank will devalue their official rates further. However, the bank denied these talks and kept their official rates unchanged by the time of publishing. According to players, black market exchange rates for the Egyptian pound reached 11-11.50 against the American dollar.
By mid-March, Egypt’s Central Bank had devalued the Egyptian pound (EGP) by almost 13-14% but the gap between the official and black market rates remained wide despite the bank’s efforts to narrow it. Egypt heavily depends on imports and has been facing an acute foreign currency shortage as the country’s foreign currency reserves have tumbled by more than 50% since 2011 despite the fact that reserves have been giving signs of stabilizing over the past six to seven months.
A trader commented, “Polymer markets are not very predictable these days with traders preferring to hold onto their offers and converters delaying their purchases. We are currently observing the market very carefully in the face of the depreciation in the black market.”
Another trader noted, “Locally held offers have started to record further increases due to the depreciation in the black market transactions. Meanwhile, buying interest remains meagre for imports with many players having abandoned their import purchases for a while now amidst ongoing cash flow issues as well as problems when opening letters of credit at banks. Many only meet their immediate needs and from the local market.”
The depreciation of the Egyptian pound has also driven more players away from the import market as they have to pay more in order to obtain dollars.
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