Egyp­tian pound soars as dol­lar liq­uid­ity rises

Kuwait Times - - BUSINESS -

The Egyp­tian pound strength­ened slightly yes­ter­day and im­porters re­ported in­creased dol­lar liq­uid­ity at banks days af­ter the In­ter­na­tional Mon­e­tary Fund (IMF) ap­proved a $12 bil­lion loan the gov­ern­ment hopes will jump-start the econ­omy. Banks were sell­ing the pound at around 15.7 to the dol­lar and buy­ing it at around 15.2 com­pared with a sell price of around 16 and a buy price of around 15 on Sun­day.

Egypt floated the pound on Nov. 3 in a dra­matic move welcomed by busi­nesses as the key to un­lock­ing in­vest­ment. It de­val­ued the cur­rency by about a third from the for­mer peg of 8.8 against the dol­lar and al­lowed it to drift lower.

The pound ini­tially fell to a rate of roughly 18 to the dol­lar, in line with prices quoted on the coun­try’s cur­rency black mar­ket just days be­fore the float. The cur­rency has been strength­en­ing since last Wed­nes­day, how­ever, when IMF Man­ag­ing Di­rec­tor Chris­tine La­garde said she would rec­om­mend the in­ter­na­tional len­der ap­prove Egypt’s lend­ing pro­gram.

Mon­day’s stronger pound rate is in line with re­ports that im­porters of strate­gic goods are in­creas­ingly able to source their dol­lar needs from banks. One im­porter said he had been re­ceiv­ing his full cur­rency re­quests on the same day, a dra­matic im­prove­ment from the lengthy queues ex­pe­ri­enced be­fore the float.

Moody’s said in a re­port yes­ter­day that in­creas­ing dol­lars sales to banks was credit pos­i­tive “be­cause it in­creases the avail­abil­ity of US dol­lars to them, which, in turn, will help ser­vice their cus­tomers’ need for for­eign cur­rency, al­low the banks to im­prove their dol­lar liq­uid­ity and re­duce their net for­eign li­a­bil­ity po­si­tion.”—REUTERS

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