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These institutions have based their forecasts on several indicators, including the increase in Egypt's debt burden by installments and benefits in the current year and in the coming years, particularly with a rise in value. external borrowing reaching the $ 100 billion threshold and the end of the agreement between Egypt and the International Monetary Fund in June. As a result, the loan from the fund will stop and the repayment phase will begin.
Among the indicators are the withdrawal of nearly $ 10 billion of speculative capital from Egypt, invested in public debt instruments last year, the increase in the external assets deficit of the Egyptian banks and the lack of foreign investment. the Egyptian pound in November 2016.
Some of these institutions have set a price of the dollar against the pound, although estimates ranged from 18 to 19 pounds at the end of this year. Even the Egyptian investment bank "Hc" in early February forecast a rise in the dollar to 19.6 pounds at the end of 2019.
In July, Capital Economics International announced that the value of the pound sterling would gradually drop to 20 pounds next year, in line with previous forecasts of the investment banks of Pharos and CI Capital at the end of 2017.
Even after the dollar began to fall, financial institutions continued to rely on a depreciation of the Egyptian currency, and not the other way around: a survey conducted by EFG-Hermes, one of the largest banks in the world. Investment on March 3, forecast a devaluation of the pound at around 19 pounds by the end of 2019.
Expectations for the dollar have increased after central bank governor Tariq Amer's comments to Bloomberg, predicting exchange rate fluctuations over the coming period, as well as the negative repercussions on the dollar. result, the most serious being the increase in the reserve of savers by the dollar to take advantage of the expected rise in its price.
Since January 27, the dollar has fallen so low that it has lost about 60 dollars since that date. The dollar's decline against the pound sterling has good reasons, including the fact that the government borrowed $ 7 billion just in February, $ 2 billion from the International Monetary Fund, $ 4 billion from international bonds and $ 1 billion from international debt. billion via dollar bills introduced into the domestic market. This has provided liquidity and greater capacity for banks to meet the needs of their clients in foreign currencies.
The government is also about to borrow 1.5 billion euros, "equivalent to $ 1.7 billion", which will provide additional liquidity that will increase the currency supply.
The decline in the dollar is mainly due to the improvement of the income of certain sectors, such as remittances, tourism and exports, the cessation of gas imports and even the beginning of exports to the countries. neighbors, including Jordan, which will save about $ 600 million for the public treasury.
The return of foreigners to invest in government debt securities, particularly treasury bills, through banks directly after the removal of the mechanism for the transfer of funds of foreign investors by the Central Bank, has provided liquidity to the banking sector, which was the liquidity of the Central Bank and added to the foreign exchange reserves.
The government has other reasons to divest shares in publicly traded companies, including Eastern Tobacco, which has attracted Arab and foreign investors, has donated tens of millions of dollars to the Egyptian market, and has extended the public debt of about 10 billion US Gulf States and China. , Which helped maintain the reserve value of the Central Bank.
Banks that meet the needs of their customers, especially foreign currency importers, reduce pressure on the foreign exchange market, In addition to the import of cars from abroad because of the boycott campaign of the great # Khaliha – reduce the pressure on the dollar.
All of these and other factors, such as the Chinese holiday season during which Egyptian imports are falling, have contributed to the devaluation of the dollar against the pound sterling in a way that even financial and financial institutions investment did not plan.
But will the decline of the dollar continue?
In the short term, it is difficult to predict, and the first test of this decline could be the beginning of April to June, period in which the demand for dollars increases due to the need of imports for Ramadan, the Ramadan season and the Paris Club debt settlement.
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