Egypt Independent

US dollar drops to new low of LE15.8 in Egypt’s banks



The US dollar exchange rate continued its decline in banks on Sunday; the lowest rate found in banks was LE15.80 to the dollar in the National Bank of Egypt (NBE).

The US dollar exchange rate reached LE20 in December but recent projections by EFG-Hermes say it should decline further to 14.5 during the next few weeks.

The NBE's website shows it sold US dollars at LE15.80 this morning, while buying at LE15.75.

Banque Misr is selling dollars at LE15.81, and buying at LE15.76; Banque du Caire is selling at LE15.85, and buying at LE15.75.

The Arab African International Bank (AAIB) is selling dollars at LE15.80, and buying at LE15.90.

Ahmed Shams el-Din, head of research at EFG-Hermes, said Sunday that he expects the US dollar exchange rate to stabilize at levels between LE15 and LE17 during the current year.

In statements to MENA news agency, he ruled out that the US dollar will return to the high levels recorded during the past weeks, when the US currency touched LE20.

Egypt floated the national currency on November 3. It devalued the Egyptian pound by about a third from the former peg of LE8.8 against the dollar and allowed it to drift lower.

Egypt's dollar peg had drained the central bank's foreign reserves, which were hit by reduced foreign investment following political turmoil in the past few years, forcing the central bank to impose capital controls and ration dollars.

The US dollar scarcity then prompted desperate importers to turn to a burgeoning black market, where the dollar at one point fetched more than twice its official value.

A severe shortage of dollar liquidity when markets opened for the first time after the flotation resulted in low volumes and the pound weakening to LE20 to the dollar.

Since the flotation, more companies have gone to the banks for their dollars, leaving them scrambling for funds, while a lack of liquidity means interbank trading got off to a slow start.