Head of the General Division of Exchange Firms at the Egyptian Chambers of Commerce (FEDCOC) Mohamed El-Abyad predicted a significant decline in the value of the dollar against the Egyptian pound on the informal market, starting from Tuesday.
El-Abyad told Daily News Egypt that, since the beginning of this week, importers have stopped buying the dollar from the informal market, after the dollar value surged to unprecedented levels.
According to El-Abyad, the dollar’s exchange rate recorded EGP 11.40 and EGP 11.50 on the informal market last week, discouraging importers from buying dollars.
He added that the dollar’s exchange value declined by EGP 1 on the informal market within just three days, after the UAE announced last Friday that it will deposit $2bn in the Central Bank of Egypt (CBE).
The UAE announcement prompted the dollar to drop to less than EGP 10 on Sunday. This coincided with importers’ reluctance to buy the dollar on Monday.
El-Abyad warned dollar owners that they would incur major losses if they did not sell their dollars during this week.
This comes despite numerous reports from international rating firms contending that the Egyptian pound is currently overvalued against the dollar.
He refused to comment on the expected interventions from the CBE to decrease the price of the dollar against the pound in the coming days. He explained that the huge rise of the dollar price on the informal market is not dependent on accurate economic factors, and will therefore see a significant decline during the week.
Despite numerous measures taken by the CBE to curb the major discrepancy between the value of the dollar on the formal and informal markets, the exchange value of the dollar has continued to steadily rise in the informal market, driven by an outsized demand on the dollar by importers and other market actors, in light of the banks’ inability to supply dollar liquidity.