CAIRO: The recent policies of the Central Bank of Egypt have restored stability to the foreign exchange market and stabilized inflation, ECB’s governor Hisham Ramez told Akhbar Al Youm on Sunday.
“Egypt’s economy is currently stable enough for allowing some decline at the Egyptian pound exchange rates before dollar,” Ramez added.
An inside source at the CBE previously told Al Masry Al Youm newspaper that “Allowing more flexibility at the Egyptian pound exchange rate before dollar will cause 4-5 percent decline in pound prices.”
Ahmed Roshdy, the former head of the National Bank of Egypt , told The Cairo Post “allowing some decline of the Egyptian pound will free the supply and demand on currencies”, pointing out that such this decision are taken after long study for the market status.
“Auctioning periodical and exceptional tenders of dollars, putting a $100.000 as maximum rate for transferring money abroad per person annually and keeping interest rates of deposits and withdrawal as possible to avoid the intensive withdraw of dollarized accounts are the principle measures for surrounding black markets,” Roshdy said.
Economists and black market dealers say that the gap between the Egyptian Pound’s official and black market rates are expected to decrease gradually by the end of 2014.
“The new policies began to bear fruit amid the market’s current decline in foreign currencies against the Egyptian Pound,” Ramez told Al-Akbar Al-Youm, adding that such policies are expected to overcome the black market for foreign currencies’.
Exchange rates of the U.S. dollar at banks are determined by the sales of the CBE, which allows the bank to control the official exchange rates.
Ramez said Egypt has suffered a harsh decline in its foreign reserves the 2011 toppling of former president Hosni Mubarak. The decline has caused large gap in Dollar exchange rates at the official markets and the parallel “black” Market.
Since the departure of former president Hosni Mubarak, Egypt has been suffered from ongoing U.S. dollar shortage amid the political situation which kept investments and tourists at bay.
The shortage caused a gap between the Egyptian pound’s official rate and its rate in the money exchange offices and the black market.
Since the beginning of current year 2014, the CBE has offered about 200 periodical dollarized offers totaling $8.46 billion, in addition to five exceptional dollarized bids of total $5.3 billion, according to the CBE’s own home page.
However, the Egyptian pound has witnessed a notable rise against foreign currencies since the announcement of the victory of Abdel Fatah al-Sisi in the presidential elections.
Sisi is scheduled to take the oath of office Sunday morning.