Cairo: Egyptian currency strategists expect the US dollar prices to drop further against the Egyptian pound over the next three months to the end of Q1 2007. Their expectations are based on the high level of US dollar liquidity at local banks and the surging foreign currency reserves at the Central Bank of Egypt to more than $26 billion combined with falling demand on the US currency.
Their expectations are based on the high level of US dollar liquidity at local banks and the surging foreign currency reserves at the Central Bank of Egypt to more $26 billion combined with falling demand on the US currency.
On Wednesday, the US dollar prices fell to LE 5.69 for purchases and LE 5.71 for sales in mid-day transactions. Over the past two months the US currency shed about LE 0.02 on its gradual decline against the Egyptian pound.
A recent decision by the Monetary Policy Committee at the Central Bank of Egypt to increase corridor rates by a quarter percentage point helped close the gap between rates on the US currency and the Egyptian pound. The policy committee’s decision was motivated by rising inflation, which began to eat into the real interest rate in the Egyptian market.
An Egyptian banker said the CBE’s attempts to contain inflation pressures through lower interest rates have been successful as fiscal expansionist policies have dominated over the monetary policies.
