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US dollar supply at banks increase, demand cools  - Daily News Egypt

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US dollar supply at banks increase, demand cools 

Banks operating in the local market are experiencing a US dollar supply increase while demand has cooled in recent days, according to Tamer Youssef, head of treasury at a bank operating in the domestic market. Banks have seen significant demand for the dollar during December and the first days of January because foreign companies operating …


Banks operating in the local market are experiencing a US dollar supply increase while demand has cooled in recent days, according to Tamer Youssef, head of treasury at a bank operating in the domestic market.

Banks have seen significant demand for the dollar during December and the first days of January because foreign companies operating in the Egyptian market were repatriating their profits after budget closure.

This led to an increase in the demand on the dollar to levels that haven’t been seen since 3 November 2016 after the Egyptian pound’s flotation. The dollar exchange price reached almost EGP 20 in many banks.

According to Youssef, the market has become calm following the high demand on the dollar. The dollar is traded at a value of EGP 18.7 and EGP 19, depending on the bank.

He added that the calm demand on the dollar is due to the decline of imports, after measures taken by the government to reduce imports.

In terms of the reasons behind the dollar supply increase in banks again, Youssef said that some dollar holders were betting its price would increase to EGP 20, which made them stop selling the dollar. This didn’t happen, so they started selling their dollars which increased the supply in banks.

The market usually goes through seasons in which demand increases and in other seasons supply increases. It is normal for the dollar price to be determined according to the demand and supply after the pound’s flotation.

Youssef expects the exchange market to stabilise, the dollar price to fall during the coming period, and the inflow of foreign exchange resources to increase.

Foreign investors started to enter the Egyptian government debt tools market, which will lead to a dollar increase in the market. Youssef stressed the importance of the government’s success in attracting more direct and indirect investments, as it will be an alternative to the hot money which will exit at the end of the day and will increase the pressure on the exchange market to cover its exit.

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https://www.dailynewsegypt.com/2017/01/30/613441/
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