Egypt — Ekhbary News Agency
The Egyptian pound continued its significant depreciation against the US dollar and other foreign currencies on Thursday, with the dollar surpassing the 27 EGP mark, reaching 27.07 EGP for buying and 27.16 EGP for selling, according to data from the Central Bank of Egypt. This decline coincided with the Egyptian stock exchange achieving historic record levels, particularly in market capitalization, which exceeded one trillion EGP for the first time, alongside state banks introducing new high-yield savings certificates.
Pound Depreciation and Flexible Exchange Rate Policy
Economic experts, including Aya Zuhair, Head of Research at Zela Capital for Financial Consulting, attributed the pound's renewed decline to the Central Bank of Egypt's adoption of a sustainable flexible exchange rate system, a decision aligned with the International Monetary Fund's requirements. This measure aims to eliminate the parallel dollar market and curb anticipated inflation. The Central Bank also announced on December 29 the cancellation of the documentary credits system for financing import operations, a move expected to provide dollar liquidity. Zuhair predicted that the pound would continue to decline until it stabilizes at a "fair price" ranging between 25 and 28 EGP per dollar.
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Stock Market Records and 25% Yield Savings Certificates
Conversely, the pound's exchange rate movement positively impacted the Egyptian stock exchange, which recorded significant gains during Wednesday and Thursday's sessions. The main index surpassed 16,000 points, and market capitalization reached 1.013 trillion EGP. In an effort to attract savings and dollar liquidity, state-owned Banque Misr and National Bank of Egypt launched new one-year savings certificates offering a 25% interest rate payable at maturity, or 22.5% paid monthly. Financial market expert Wael Enaba explained that these certificates target dollar holders to convert their currency into pounds, emphasizing the importance of allowing foreigners to purchase them to attract more hard currency, especially as their returns are tax-exempt.
