Dollar Breaks 50-pound Barrier for First Time since March

Egypt's pound fell to close at 50.0024 against the dollar on Thursday after breaching the 50-pound barrier for the first time since March, Central Bank of Egypt (CBE) data showed.

The Egyptian currency has traded at levels just below 50 to the dollar since Cairo signed an $8 billion loan agreement with the International Monetary Fund on March 6, under which Egypt pledged to let supply and demand determine the currency's value.

The currency has come under heavy pressure in recent weeks ahead of a maturation of pound-denominated treasury bills held by foreign investors, as well as other payment maturities, analysts said.

                                      Buy       Sell

US Dollar                    49.93    50.06

Euro                            52.61    52.76

Pound Sterling          63.55    63.75

Swiss Franc               56.51     56.69

Japanese Yen 100    33.24     33.33

Saudi Riyal                13.28     13.32

Kuwaiti Dinar           162.43   162.92

UAE Dirham             13.59      13.63

Qatari Riyal              13.69      13.73

Jordanian Dinar       70.33      70.56

Chinese Yuan           6.87        6.89

In the weeks since Egypt signed the IMF deal, foreigners have been major buyers of nine-month and 12-month T-bills due in December and March, potentially leading to a surge in demand for dollars if enough investors seek to repatriate their money.

More than EGP 1 trillion worth of local currency T-bills expire in December and March, according to a banker’s calculations based on central bank data.

An IMF mission concluded a week-long visit to Cairo on Nov. 20 to review the loan program, and the fund said Egypt had made significant progress, although its board has not set a date for a meeting to discuss the review.

Egypt is also due to repay the fund $933 million in the second half of December, according to IMF data, payments tied to previous loans.

Moreover, Egypt’s rapid money supply growth has also put pressure on the exchange rate and fueled inflation, with M2 money supply growing by 29.59% in the year to the end of September compared with 2.6% in the United States.

Over the year before the IMF deal, the central bank kept the exchange rate steady at EGP 30.85 to the dollar, leading to a severe shortage of foreign currency in the Egyptian market and a slowdown in vital imports.