Hassan Abdullah, the governor of the Egyptian Central Bank, stated that this tendency will “alter culture and mindset” with regard to the correlation between the exchange rate and the US dollar.
“Abdullah” said during the activities of the economic conference organized by the Egyptian government under the slogan “a road map for a more competitive economy”, that “the Egyptian Central is working to measure the performance of the pound in front of all currencies . ..
For instance, the pound grew 100% in value in comparison to the Turkish lira, as well as in comparison to the sterling and the euro. This is because his nation doesn’t export oil, so it doesn’t have a fixed exchange rate for the dollar.
This coincides with the Egyptian pound’s ongoing drop against the dollar since March, when it lost roughly 25% of its value and was trading at a level of 19.
Rafnitiv Akon data indicates that there are currently 69 pounds to every dollar, up from around 15.7 pounds to every dollar prior to March 21.
The indicator’s meaning is unclear.
Yemen Al-Hamaki, an economist at Ain Shams University, commented on the new trend of the Egyptian Central Bank and said in statements to “Sky News Arabia” that “this means a sign from the governor of the central bank that the true value of the Egyptian pound is not only related to dollars, but other currencies that reflect relationships Commercial and economic with the countries of the world.
The European Union is one of Egypt’s major trading partners and a source of foreign direct investments, according to “Al-Hamaki.” The European Bank for Reconstruction also plays a significant role in assisting Egypt’s economy, therefore it is encouraging to observe how the euro affects the Egyptian pound.
“What we understand from the direction is that there is a clue that demonstrates the Egyptian pound in its relationships with other currencies with which we are associated through our economic relations as well as with gold, and from a long time we call for the pound that the pound is not related to the pound only with the American dollar,” she continued.
For his part, economist and professor of economics at the Arab Academy for Maritime Transport, Ali Al-Idrisi, asserts that while some oil-exporting nations have linked their currencies to the dollar, Egypt does not, and as a result, its currency has not. However, this view is contingent on the fact that the majority of Egypt’s imports come from abroad in the form of dollars, and as their value rises, so do domestic prices.
Al-Idrisi told “Sky News Arabia” that the index “is a tool for hedging and generates a sort of stability in the exchange market because we do not measure in front of a single currency, which gives somewhat stability in the money market.”
He emphasised that the Egyptian pound index will be used as a measure alongside a basket of global reserve currencies, including the dollar, the pound, the euro, and the yuan, and that it may also include other currencies, such as the Russian ruble, next to gold. This helps to maintain the stability of the exchange rate.
In this regard, the governor of the Central Bank of Egypt disclosed that future hedge contracts for the risks of currency price fluctuation were complete, as he believed that they would help the economy develop more quickly.
Egyptian pound index specifically. What are the repercussions of the move on the money market?
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