Dollar Speculators on Black Market Receive Severe Blow

The price of the dollar fell on the parallel (black) market in Egypt on Saturday, hours before the start of work for banks on Sunday.

The price of the dollar on the black market, before the Central Bank of Egypt’s (CBE) decision to raise the interest rate, reached more than EGP 36 on the black market, as many reports say, while the official price of the dollar in banks did not exceed EGP 27.

The difference between the black market price and the official one has never seen this difference, however speculators say they offer such numbers, reports which isn't really backed by real evidence.  

The rake hike, which is supposed to contain inflation, makes it more expensive to acquire loans, and it also gives depositors to put their savings in banks for a better return instead of speculating of the dollar, and gold.

In 2016, the IMF posted on its official website that the real value of the Egyptian pound against the dollar should be EGP 16 instead of EGP 8. Later on the fund asked for another devaluation, and full liberation of the exchange rate, which could push the dollar to record about EGP 30, claiming that this move would bring more investments, tourism.

The devaluation of a currency indeed brings more FDI, tourism, as well as a drop in imports, which would benefit the balance of trade in the country, however, it put a big burden on the average citizen, who experience a hike in prices, due to the fact that some components of production in Egypt is imported from abroad.

The black market assumed price affected the prices of goods and services and raised their price above the real value.

According to the reports, the price of the dollar fell today on the black market against the Egyptian pound to about EGP 29 before the start of the banks’ work, in which currency rates, including the dollar, were not affected by the decision of the Central Bank, due to the issuance of the statement of the Monetary Policy Committee in the Central Bank after the end of the banks’ working day.

The decision to raise the interest rate by the Central Bank came within the framework of the Central Bank’s efforts to confront high inflation rates and also to eliminate speculation on dollar prices on the black market.

The future path of inflation rates depends on the cumulative increases in interest rates to date, and it takes time to affect inflation rates.

The central bank's decision quickly reaped its fruits, as the dollar price has already witnessed drop in the official rates in banks, at a level of EGP 24.63 pounds to buy and EGP 24.71 to sell.

While speculators on the price of the dollar on the black market received a severe blow, as one dollar lost about EGP 12, reaching the level of EGP 26, after it was presumably trading at EGP 38, before the Central Bank’s decision to raise interest by 3%.