Future of Egyptian Pound in 2020- Report

Beltone Financial expects the price of the Egyptian pound to settle at EGP 16 against the US dollar in 2020, at the peak of its upward trend.

"All the possibilities are in favor that the Egyptian pound will continue to appreciate against the dollar until 2020, with limited fluctuations in the range of EGP 16-17," Beltone added, pointing out that the Central Bank of Egypt (CBE) will have to maintain the inflation target and the monetary easing cycle.

"The rise of the pound above the level of EGP 16 will stimulate demand for the greenback, particularly among importers, who will look to buy raw materials at a lower cost, bringing the dollar up again," Beltone continued.

The positive outlook of the Egyptian pound depends mainly on the growth of Egypt's foreign currency reserves, including the positive impact of a budget surplus, exceeding net oil expenditures, for the first time since 2015.

Pressure on the local currency has plummeted, as demand for the dollar has fallen due to limited demand for non-oil imports, as well as improved net foreign assets of banks to turn into a surplus of about $ 2 billion last June.

Beltone noted a sufficient amount of foreign reserves that will cover import expenses by 7.8 times, except for major payments in 2019, allowing the CBE to meet the country's operational needs.

According to recent data from the Ministry of Finance, the pound is also benefiting from an improvement in the external debt service schedule, as the ratio of short-term debt to total external debt fell to 10.7 percent last December, compared to 13.3 percent in June of the same year.

The report predicted that this rate will continue to improve as the demand for long-term debt in local currency increases with the Egyptian market joining Euro Clear and increasing macroeconomic stability.