Governor of the Central Bank of Egypt (CBE) Tarek Amer said in a statement on Wednesday that there are false claims promoted by some who claim that the exchange price of the Egyptian pound in the informal market is the real price. “It is not a fair price,” Amer declared.
Amer noted that the trading volume in the informal market does not represent the real demand for the dollar. Moreover, the dollar price in the informal market does not reflect the market’s economies.
Amer condemned media outlets for focussing on exchange rates in informal markets, which do not represent the actual demand on the dollar, adding that rumours lead these markets and feed the demand for them, with the goal of achieving private gains at the expense of the national economy.
Mohamed Abdel Aal, member of the board of directors of the Arab Sudanese Bank and the Suez Canal Bank, concurred with Amer, highlighting that prices of dollars in trading outside the banking sector cannot be considered reliable.
In order for an exchange market to be described as reliable, it must meet several conditions, the most prominent of which is full transparency in its trading and reasonable amounts of foreign currencies, in addition to a clear knowledge of who can present foreign cash and who can purchase it.
Abdel Aal added that if these conditions were applied to the unofficial market, we would discover that it is not a market at all. The prices of dollars in the informal market are not trustworthy, and do not represent the actual prices of the US currency compared to the Egyptian pound, he stressed.
“They [the exchange firms] are only a group of individuals who have dollars, surrounded by a buyer group that wishes to negotiate for the dollar price without specific standards. When they reach an agreement, regardless of its level or quality, the deal gets implemented,” said Abdel Aal, in a description of the procedures that have been taking place recently.
Abdel Aal pointed out that approximately $2tn is being traded in the global currency market per day, divided between present and future transactions. If we look at the so-called black market in Egypt, we will find that a very limited amount is being traded through it, which does not exceed a few thousands, added Abdel Aal.
Abdel Aal said there is no real reason for the high demand on the dollar currently. He explained that those who demand dollars either need them to pay for external obligations, such as importers or producers who need to buy production components, or those who wish to travel abroad for any purpose such as tourism, medical treatment, or pilgrimage.
Moreover, Abdel Aal noted that some media outlets in Egypt and abroad are negatively influencing the crisis by promoting unrealistic prices of the dollars traded outside the banking system.
According to Abdel Aal, even Egyptian state-run television has made this mistake by broadcasting the dollar prices traded outside banks as though they are real and recognised prices. “This is a disaster by any measure,” he declared.
Egypt is going through a very difficult phase, which requires everyone to cooperate to pass through it safely, said Abdel Aal.
Currency exchange in the unofficial market is ruled, to a great extent, by rumours. Additionally, the dollar prices in this market are random and unrelated to the dollar’s realistic price, according to Mohammed El-Abyad, head of the general division of the exchange firms at the Federation of Egyptian Chambers of Commerce.
The volume of demand for the dollar in the unofficial market would not boost its price to the levels reported, particularly in the last two weeks, said El-Abyad.
Given the status of the markets and the recession they are experiencing, this high and random demand on the dollar taking place, all at once, is incredibly unusual, said El-Abyad.