Foreign investors have transferred more than $925 million into the Egyptian foreign exchange market in the three days since the pound witnessed sharp depreciation on January 11, Egypt’s central bank said in a statement on Monday.
The Egyptian currency weakened to about EGP 32 to the dollar from EGP 27.60 at the open on Wednesday before rebounding to EGP 29.61 by end of trade on Monday.
Additional foreign currency from local sources, remittances from Egyptians working abroad, and tourism also flowed into the Egyptian market over the past three business days, the central bank statement further read.
Egypt pledged in late October it would shift to a “durably flexible” exchange rate regime, leaving the forces of supply and demand to determine the value of the EGP against other foreign currencies. This was shortly followed by reaching reached an agreement with the International Monetary Fund (IMF) for a $3 billion financial support package.
The North African country turned to the IMF for assistance after Russia’s war in Ukraine pushed up its bills for wheat and oil while dealing a blow to tourism from two of its largest markets, Ukraine and Russia, a key source of hard currency. It has been loosening its dollar peg in jumps, with a view to making the currency float freely.
Egyptian banks were able to fulfil more than $2 billion in requests by local importers over the past three days, in addition to the requests of other clients, the central bank statement further added.
Goods began piling up in Egyptian ports after the central bank placed restrictions on imports in February. However, the central bank had removed those restrictions last month, and importers have been scouring for dollars to get their goods released.
Sales of Egyptian treasury bills of one year or less inched up at auctions on Thursday and Sunday as investors continued to flood back after the currency’s depreciation.
