Analysts expect dollar to reach 8 pounds

Egyptian financial analysts expected the dollar to continue rising against the Egyptian pound on the official and black markets to reach eight pounds soon, in light of declining hard currency revenues.

The dollar rose against the pound on the official market from 7.015 pounds buying rate on 20 April to 7.15 pounds on Wednesday, and from 7.34 pounds to 7.60 pounds on the market.
Wael Ziada of Hermes said the dollar exchange rate in the coming three to six months is contingent upon the aid from the Gulf states. “If the aid stops, it will hit eight pounds,” he said, adding that there are no economic or political reforms at the moment that give any indication in this regard. “The presidential election is a good move, but not enough to balance exchange rates.”  
“The Central Bank is no longer able to balance the exchange rate due to a continued decline in hard currency revenues and aggressive speculations on the market,” he said. “And the bank’s recent bidding had but a slight effect due to an increasing demand.”
For his part, Tamer Shaker of the Golden Exchange Company agreed that speculations on the black market do affect the rate. “Although the dollar went up, it did so in much lower ratios than in previous years,” he said. “And demand should not pressure the rate up.”
Financial analyst Hisham Ibrahim cited Central Bank Governor Hisham Ramez who said a few weeks ago that he would eliminate the black market within three months. “This is too difficult to achieve,” he said, explaining that the bank will have to meet its obligations from the cash reserve, which will affect the exchange rate of the dollar. “There are US$3 billion that must be paid to Qatar at the end of 2014 and another US$700 million to the Paris Club in July.”
“It will be difficult to pay those US$3.7 billion dollars with tourism and foreign direct and indirect investments are low,” he said. “So the dollar is bound to rise.”
“The central bank must withdraw licenses of exchange companies that undergo speculations,” he said. “The rising dollar will raise commodity import prices as well, especially in the month of Ramadan where consumption is high.”
Edited translation from Al-Masry Al-Youm

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