Egypt’s central bank governor Hisham Ramez has said that the bank’s policies aimed at stabilizing the foreign exchange market and keeping inflation under check are working.
The central bank has been intervening in the official market and allowing the Egyptian pound to lose value, guessing that the economy has grown stable enough to give it room to intervene without causing volatile shifts in the currency, though it has never revealed the strategy in public, reported Reuters.
Egyptian newspaper Al-Akhbar Al-Youm quoted Ramez on Saturday as saying that the measures were “beginning to bear fruit as the market is already experiencing a significant decline in other currencies against the Egyptian pound. He also expressed confidence that the policies would spell the end of the black or “parallel” market that has existed mainly due to the spread between the official and unofficial foreign exchange rates.
The rates at which lenders are permitted to trade the US dollars is based on the results of central bank’s currency sales, ensuring the bank has tight rein over official exchange rates.
Egypt has been grappling with a stubborn dollar shortage after the political tension after the 2011 riots that ousted former leader Hosni Mubarak unsettled tourists and foreign investors, who all bring the much-needed foreign exchange. The shortage created a huge spread between the pound’s official market value and the much lower black market rates.
Nonetheless, the value of the pound has markedly accelerated in the illicit market after the former army head Abdel Fattah al-Sisi won the presidential elections held in May. Most black market traders and economists are of opinion that the pound’s black market rate will soon equal the official rate before the end of this year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org