HSBC Bank raises its expectations for the dollar price to 32.5 pounds in the first term

HSBC Bank raises its expectations for the dollar price to 32.5 pounds in the first term
HSBC Bank raises its expectations for the dollar price to 32.5 pounds in the first term

06:48 PM

Saturday 07 January 2023

I wrote – Manal Al-Masry:

HSBC Bank raised its expectations for the price of the dollar against the pound, likely to record in the near term 32.5 pounds on average, compared to 26 pounds in its previous forecasts, according to a newly released report, of which Masrawy obtained a copy.

The report indicated that the continued decline of the Egyptian pound in the near term is due to the very high financing needs (from the dollar) and the weak capital flows during this period.

The third wave of sharp declines in the exchange rates of the pound during the first days of 2023 led to a rise in the price of the dollar to about 27.2 pounds at the end of trading on January 5, so that the dollar rose about 75% from last March (before the first wave of declines), according to the report.

According to HSBC, the current round of currency devaluation is part of a long-anticipated campaign to rebalance Egypt’s external accounts after last year’s external shocks.

The Russian-Ukrainian war caused an outflow of indirect investments from Egypt worth $22 billion during the first 6 months of 2022, according to what Prime Minister Dr. Mostafa Madbouly said earlier.

The bank stated that the decision to raise the interest rate came to accommodate the decrease in the exchange rate, as the central bank decided to raise the interest rate by 3% last December, and the inflation rate was maintained in the near term at 7% (+/- 2), targeting its descent to 5%, with an increase or decrease. 2% during the fourth quarter of 2026.

The bank indicated that Egypt has sought in recent weeks to implement a program to re-achieve the complex balance point, which included obtaining the approval of the Board of Directors of the International Monetary Fund late last December to pump a $3 billion loan to Egypt.

The fund announced the immediate approval of transferring the first batch of $347 million to Egypt, which opens the way for another $3 billion in financing support expected from multilateral sources before the end of the fiscal year in June, according to the report.

The International Monetary Fund is also studying Egypt’s request to obtain one billion dollars from its Sustainability Fund, in addition to replenishing the deposits of the Gulf Cooperation Council countries in the Central Bank, and pumping two billion US dollars as foreign investment in a program to offer a number of government assets and shares in Egypt, according to the report.

HSBC Bank indicated that the central bank began to switch to a flexible exchange rate, as stated in the International Monetary Fund statement, and this was demonstrated by financing documentary credits for the release of goods stacked in ports.

Dr. Mostafa Madbouly had said earlier that Egypt had secured $5 billion during the first 23 days of last December to release goods at the ports, and another $1.8 billion had been secured during the last 10 days of December.

The article is in Arabic

Tags: HSBC Bank raises expectations dollar price pounds term