By Nourhan Fahmy The official and parallel market rates of the Egyptian pound are converging, with the official rate expected to “spike temporarily” possibly rising to EGP 19 to the dollar before stabilizing at EGP 12-13 in 2017, an Arqaam Capital report stated. Egypt floated the national currency last week, thus allowing the pound to be determined by supply and demand forces through the interbank mechanism. Before the decision to float, the pound had weakened to unprecedented levels on the parallel market, reaching EGP 18 to the dollar, more than a 100 percent differential with the official rate, amid an acute dollar shortage. Arqaam Capital said in its report published Wednesday that early signs indicate dollars have started to flow to banks, which have attempted to meet individual clients’ needs and secure the foreign currency needed for importers “albeit in small amounts.” “Egypt appears to be on a different and better path for growth and investment,” the report read. However, the firm expects the poor and middle-income segments to “feel the pain before the gain” and to attempt to challenge the government’s decision to just monitor and regulate. Challenges could present…
Egyptian Pound to Trade at Weaker Rates Before Stabilizing at 13 per USD: Report
November 10, 2016
