BN Bank disclosed Barbia, that the prevailing dollar prices in the market against the pound do not reflect the true value of it, expecting that the government will postpone the flotation decision for a temporary period.
Dollar prices stabilize in banks and fall in the black market:
Dollar prices against the pound continued to stabilize in banks today, at levels of 30.85 pounds for purchase and 30.95 pounds for sale in the central bank, while sharp declines were recorded over the past days on the black market, with reports indicating that the central bank had abandoned floating the currency value now; To trade at levels less than 35 pounds, after the price of the dollar reached 41 pounds.
Evaluating the pound on the black market is not fair:
Mohamed Abdel Majeed, an economist, said At BNP Barbia, if the pound is currently being valued, we expect the fair price for it to be much lower than the current market exchange rates.
He continued, “The foreign investor, away from the exchange rate movements, is not currently considering a return to investing in the Egyptian bond market, given that the return on them, even after hedging against exchange rate fluctuations, is negative in the range of up to 40%.
Return of foreigners to debt instruments again:
He added that the solution to the hard currency crisis in Egypt will not be achieved by selling assets, whose value is expected to not reach the government’s targets of $2 billion by next June, so the decision to float the currency will be postponed now and for a temporary period.
He explained that the solution to the hard currency crisis is through the return of foreigners to invest in debt markets again, indicating that their return requires an abundance of dollars in the markets, showing flexibility in the exchange rate, and raising interest at record levels.
The Central Bank is scheduled to meet today to set interest rates on deposits and lending, amid expectations of fixing them at 18.25% and 19.25%, after the slowdown in the pace of inflation increases.
The Central Bank raised interest rates at its last meeting by about 200 basis points, stressing that this comes within the framework of containing inflationary pressures, and reaching the target range of 7%, plus or minus 2%, by the fourth quarter of 2024.