Growing uncertainty towards planned massive protests on 30 June has cast a shadow on expectations of the value of the US dollar in Egyptian markets. Some experts said they expect the Central Bank of Egypt to auction dollars to local banks in order to offset the currencies shortage in the market.
Others believe the price of the dollar will pick up or remain unchanged as upheavals escalate.“I expect no rise in the cost of the dollar,” said Mohamed El-Abyad, head of Chamber of Exchange Companies in the General Federation of Egypt Chambers of Commerce. He predicted that banking operations would slow in the next weeks, as 30 June approaches.
Banking expert Bassant Fahmy said she does not expect dollar prices to increase. She added the Central Bank could start foreign exchange auctions as a way to meet the foreign currency needs of local banks.On the other hand, Sameh Abdel Rahman, head of Crown Company for Exchange, expected a big jump in prices that may reach EGP 8.
The price per US dollar according to the Central Bank’s website on Tuesday was at EGP 6.99.“People are worried now, and anyone rich with dollars like exporters will hang on to them, which will lead to a shortage in dollar sales,” he said.
Abdel Rahman said he was unable to speculate any more on the dollar market amid looming protests, saying: “No one has the courage to speculate amid this unrest, everyone is afraid.”“Any fluctuations in the Egyptian street, will directly impact the price of the US dollar,” said Hossam Naser, former deputy head of the Industrial Development Bank.
“There will be a rush in dollar demand, especially shortages of available currency that will push people to black markets, thus raising prices.”MSCI, an international provider of investment decisions, said in a statement on Tuesday that it “may be forced’’ to exclude Egypt from the emerging markets index due to recent Egypt’s shrinking foreign currency reserves.
According to a report by the Central Bank, the country’s reserves inched to $16.04bn in May, a slight increase compared to a low $13.4bn in March which was sufficient to cover only three months’ worth of imports.