Bloomberg: Egyptian Pound Strongest Among Peers

The Egyptian pound recorded a strong performance against the dollar, surpassing all emerging market currencies since the beginning of this year, contenting itself with a marginal decline that did not exceed 0.089% despite the repercussions of the novel coronavirus.

Bloomberg data showed that the Egyptian pound is the strongest performer against the dollar in 2020, recording an average price of EGP 16.18 at the end of trading in the second week of June, compared to an average price of EGP 16.05 at the end of last year 2019, a drop of only 13 piastres.

Statistics of Bloomberg indicated that other emerging market currencies such as the Russian ruble, the Turkish lira, the southern African rand and the Brazilian real fell by rates ranging between 9-18% since the beginning of the year.

The Brazilian real declined by 17.76% during the year 2020 compared to the dollar, while the South African rand fell by 15.3 percent, the Argentine peso by 13.44% and the Mexican-peso by 13.36%.

The Turkish lira fell against the dollar since the beginning of 2020 by 12.2% , the Ukrainian hryvnia by 10.86%  and the Russian ruble by 9.6%, while the decline was less severe for the Chinese yuan by 1.4%.

Traders in the exchange market attributed the strength of the Egyptian pound’s performance and the limited decline recorded against the US dollar to the strong foundations of the Egyptian economy and the success of the Central Bank of Egypt (CBE) in creating reserves exceeding $45 billion before the crisis, which supported the strength of the pound.

Haitham Adel, head of capital markets sector at the Industrial Development Workers Bank said that the reform program implemented by Egypt has strengthened the persity of its foreign exchange sources from various economic sectors, indicating that the success of the central bank in forming a strong monetary reserve and the presence of strong financial links to national banks helped avoiding big drop in revenue in recent months.

He added that the success of the reform program and the agreement with the International Monetary Fund (IMF), 4 years ago,  contributed to increasing confidence in the Egyptian economy by international institutions and funds, noting that Egypt had succeeded in obtaining $13 billion in cash flows from the new agreement and the offering international bonds, which supported the strength of the pound.