By Ayat Al-Battawi
Experts expect the price of the Egyptian pound to continue to depreciate against foreign currencies throughout 2013, a result of a rise in the US dollar on the Egyptian market towards the end of 2012.
Throughout 2012 Egypt’s currency dropped 8.4% against the euro, which cost EGP 8.4 by the end of the year. Egypt’s currency dropped a total of 11% against the sterling in 2012.
Karam Suleiman, head of the international transactions division at a foreign bank in Egypt, said the price of the Egyptian pound vis-a-vis the euro and the sterling was largely determined by the value of these currencies against the US dollar. Any rise in the price of the dollar would have a large effect on the Egyptian pound.
Suleiman said any improvement in the price of the pound would be dependent on supply and demand economics, pointing out the current demand for dollars in Egypt was much higher than the country’s available supply.
He added that any potential balancing of the country’s supply and demand for dollars was not likely in the coming months due to the continued rise of the local exchange rate. He stated that the price of the pound would only stabilise against foreign currencies once a balance had been achieved, or if the country’s supply of dollars outstripped demand.
Last year also witnessed a 5.7% decrease in the price of Egypt’s currency against the Saudi Riyal, a 5.8% drop against the Emirati Dirham, and a 100 PTS fall against the face Kuwaiti Dinar.
Amr Sayf, deputy head of the treasury department at a private Egyptian bank, said the decrease in the value of the pound would cause inflation. This was especially true he said, in the absence of the existence of proper mechanisms to restrain the market, so that the price of goods does not rise faster than that of foreign currency.