The study prepared by banking expert Ahmed Shawky, and the Middle East News Agency obtained a copy, stated that the main objective of the decision to liberalize the exchange rate on November 3, 2016 was to control the pound exchange rate system.
She pointed out that it represents one of the most important measures of economic reform processes and the backbone of the reform program, which has contributed to the achievement of many gains and structural reforms for the Egyptian economy, the most important of which is the real contribution to eliminating foreign currency trading outside the banking sector in the parallel market, and curbing the negative effects of the black market. That significantly affected all economic sectors.
She added that the decision to liberalize the exchange rate paved the way for the Central Bank to provide more monetary easing to the economy, including successive interest reduction measures and initiatives to support the economy that boosted domestic production and exports and contributed to increasing foreign exchange flows to Egypt, which also contributed to lowering inflation rates from high levels. After the liberalization decision, it reached near 35%, to very low levels by the end of the third quarter of 2020, not exceeding 4%.
The study prepared by banking expert Ahmed Shawky monitored the development of the Egyptian pound movement since the liberalization of the exchange rate in 5 phases, the first of which is the turmoil phase (2016), as the remaining two months of 2016 witnessed severe turmoil between high and low, as the price of the dollar jumped against the Egyptian pound on the day of The decision to float by 52% to reach the price of the dollar to buy 13.53 Egyptian pounds against 8.85 Egyptian pounds, and the dollar price rose to 17.76 pounds by the end of November 2016, recording a 100% increase in the price announced by the Central Bank of Egypt on 11/3/2020, then the price of the dollar increased The American Bank again on December 20, 2016, reaching its highest price, recording 19.13 EGP.
She pointed out that the second stage was the gradual improvement phase (2017), as the price of the Egyptian pound began to gradually improve since late 2016 and with the beginning of 2017 until the price of the dollar (buying) reached 17.68 against the Egyptian pound compared to the highest point of 19.13 pounds in 2016. An improvement of 7.6%, with a decrease in the price of the dollar against the pound by 1.45 Egyptian pounds.
While the third stage, during the year 2018, witnessed a relatively stable exchange rate of the pound against the US dollar with a slight relative increase, bringing the price of the dollar against the Egyptian pound by the end of 2018 to 17.86 Egyptian pounds, with an increase of 18 piasters and a rate of about 1.5%. Then the fourth stage, which is a stage The recovery (2019), as it witnessed the start of the recovery of the Egyptian economy and the real shift towards growth, as the Egyptian economy achieved a primary surplus for the first time amounting to 2% of GDP in the year 2018/2019, and an initial surplus in the fiscal year 2019/2020, which is one of the highest rates Growth in the Middle East and North Africa region compared to previous years, most of which represented a deficit with an average capacity of -3.5%. The performance of the Egyptian pound against the dollar improved by 10.5%, at a value of 1.88 pounds, to reach the price of the US dollar by the end of 2019 at 15.99 Egyptian pounds for purchase.
The fifth stage 2020 is the real test phase. As the performance of the Egyptian pound continued to improve against the US dollar during the first two months to complete the stage of reaping the fruits of the economic reform program, with an improvement rate of 3% and a value of 45 piasters, bringing the price of the dollar for purchase to 15.54 Egyptian pounds, and with the start of the spread of the Corona virus crisis in March 2020, which Emerging currency markets suffered a sharp deterioration with the expectation of a recession in the global economy by the International Monetary Fund. However, the performance of the Egyptian pound was affected by a very slight rate, as the price of the dollar rose against the pound by 15 piasters, and by less than 1%.
The study prepared by banking expert Ahmed Shawky indicated that with the start of the implementation of the precautionary measures from the Central Bank on March 15, 2020, the price of the dollar (to buy) stabilized for a period of two months at 15.69 Egyptian pounds, and then witnessed a state of rise and fall with an average of 15 piasters during the period of 15 So far, the price of the US dollar reached 15.65 Egyptian pounds, again retreating from the rate in effect before the start of the implementation of precautionary measures by the Central Bank of Egypt on March 15, which was 15.69 Egyptian pounds at the time.
The study indicated that there were another set of factors contributing to the improvement in the performance of the Egyptian pound against foreign currencies, on top of which is the increase in the balance of the international reserve of foreign exchange, reaching $ 45.12 billion by the end of September 2019, which covers Egypt’s needs for a period of 8 months, which contributed In transit from the Corona crisis and the payment of international obligations related to external debt, and began to rise and relative stability, bringing the balance of cash reserves to 38.42 billion US dollars by the end of September 2020 in addition to the increase in the value of remittances from Egyptians abroad to reach their value in the fourth quarter (April – July) of the year 2019 / 2020 to $ 9.1 billion, compared to $ 9.5 billion during the same period last year.
The study indicated that the value of remittances from Egyptians abroad increased by 8.2% since the beginning of the current year until the end of July 2020, an increase of 1.3 billion pounds to reach 17 billion Egyptian pounds compared to the same period in 2019, and the confidence of foreign investors in the Egyptian economy, to achieve high rates of profit and return flow Foreign investments once again to the Egyptian market.
The study prepared by banking expert Ahmed Shawky concluded that the decision to liberalize the exchange rate four years ago strengthened the strength and durability of the Egyptian economy and the safety of the measures applied in maintaining the stability of the Egyptian pound’s performance against the US dollar, and crossing the current crisis that toppled many currencies in emerging markets such as the Argentine peso. 51.9%, the Brazilian real is 39.8%, the Turkish lira -30.3%, the Chinese yuan -0.1%, the Mexican peso -14.4%, and the Malaysian ringgit -1%.
It pointed out that the Egyptian pound achieved the second best performance for currencies by 4.9%, the Philippine peso was 6.1%, and the Taiwan dollar 4.8%, according to a Fitch report.
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