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The Egyptian pound, one of the best performing currencies in the world during 2019, broke a major price barrier after entering inflows exceeding $ 1.5 billion during the past week.
The pound recorded a new rise of 0.9% to 15.92 against the dollar, on Monday, to trade in a stronger level of 16 pounds against the dollar for the first time since March 2017, according to a statement issued by the Central Bank: Local banks have witnessed inflows of up to 1.7 billion dollars since last Wednesday .
The Egyptian pound rose, whose exchange rate was liberalized in late 2016 as a result of a crisis in foreign currencies, which increased the attractiveness of investing in debt instruments in local currency last year, which recorded a very attractive return of about 15% on local bonds, in addition to Economic reforms recommended by President Abdel Fattah El-Sisi.
The central bank has cut the key interest rate by 350 basis points to 12.25%, since last August. It is likely to cut the interest rate again to about 11.5% next Thursday, according to a poll by Bloomberg economists.
She stated that the monetary easing operations do not significantly affect the rate of investor flows in government bonds, and the research sector at Societe Generale expects the pound to rise by 3.7% to record about 15.35 pounds against the dollar by the end of this year, and to reduce the current account deficit and increase revenues from Tourism adds to the attractiveness of the currency, according to the investment bank, EFG-Hermes, which is based in Cairo.
“This supports the positive outlook of the Egyptian pound, which still attracts foreign investors, thanks to the high real rate of return,” said Mohamed Abu Basha and Mustafa El-Baqly, economic analysts at EFG-Hermes in a note published Tuesday.
According to Alan Sandeep, head of research at the Naeem Brokerage Company in Cairo, one of the main things to look at in the future will be Egypt’s external debt obligations, and he said it is likely that the deposits of Gulf states will be renewed or extended, including the Kingdom of Saudi Arabia Saudi Arabia and the United Arab Emirates. “If this is to happen, the Egyptian pound is likely to rise,” or to stay at around 15.75 against the dollar, he said.
The rise may also reflect investor entering the market to obtain high returns before the expected rate cut on Thursday, as purchase orders for Egyptian treasury bills rose during the last two bids, reaching about 85 billion pounds ($ 5.3 billion) in a bid last Thursday alone, according to Mr. Sandeep .